$\backslash$table$[[$Selling Prive,R$],[$Variable Cose,A so$],[$Fixed Production overhead,$3\mathrm{.}70]]$

"All variable costs are manufacturing l$.$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. Eudgeted non$-$production overhead $($all fixed$)$ is R$16,800$ per period.

Actual sales and production for two periods has been:

$\backslash$table$[[,$Period $1,$Period $2],[$Sales$,11600$ units,$12400$ units$],[$Production$,12000$ units,$12300$ units$]]$

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 usir marginal costing.

Prepare the statement of comprehensive income for periods $($ie period $1$ & Period $2),$ using marginal cost 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 costi marginal costing. Calculations are required to support your explanation.