REQUIRED: 2.1 Prepare the actual net profit statement using the direct costing method. (13 marks)

2.2 Prepare the actual net profit statement using the absorption costing method. (14 marks) 2.3 Discuss the effect on profit between the two methods (Direct costing and Absorption costing) in each of the following scenarios: 2.3.1 Production equals Sales units 2.3.2 Production exceeds Sales units 2.3.3 Sales exceeds Production units (3 marks)

QUESTION 2 (30 marks) Game Lid manufactures and sells product X. The following information is available for Game Lid's financial year ending 31 December 2023: Actual information: Opening Inventory Direct costing R54 000 (6 000 Units) Opening Inventory Absorption costing R85 500 (6 000 Units) Units manufactured 36 000 Sales R800 000 Sales units 34 000 Direct material R5 per unit Other variable production costs R4 per unit Sales commission cost R1,50 per unit Variable admin cost R0,50 per unit Total Fixed production cost R160 000 Total Fixed Selling and Admin costs R130 000 Budgeted information: Fixed production overheads R168 000 Budgeted units 32 000 Additional information: Game Lid values inventory using the First in First out ("FIFO") method