A company manufactures and sells a single product. Budgeted data per unit of the product is:

$*$All variable costs are manufacturing i$.$e there are no non$-$manufacturing variable costs.

The above fixed production overhead absorption rate is based on budgeted production of $12,000$ units per period.

Budgeted non$-$production overhead $($all fixed$)$ is R$16,800$ per period.

Actual sales and production for two periods has been:

There was no stock at the start of Period $1.$ The selling price, unit variable costs and total fixed costs were as per

budget in both periods.

REQUIRED

$1\mathrm{.}1$ Prepare statements of Comprehensive income for both periods $($ie period $1$ & Period $2),$ using absorption costing,

showing the actual results for each of the two periods.

The company wishes to compare the results reported in $(1\mathrm{.}1)$ above with those that would be reported using

marginal costing.

Prepare the statement of comprehensive income for periods $($ie period $1$ & Period $2),$ using marginal costing,

showing the actual results for each of the two periods.

$1\mathrm{.}2$ Explain fully why the profits reported in period $1$ differ when profit is calculated using absorption costing and

marginal costing. Calculations are required to support your explanation.