You are given the following budgets for period 1 (six months) and period 2 (six months):

Period 1 Period 2

Sales units 20 000 28 000

Production units 25 000 30 000

The following budgeted information applies to both periods:

Selling price per unit R6.80

Variable cost per unit R3.40

Fixed annual manufacturing overhead (period 1 and period 2) R110 000

Fixed annual manufacturing overheads are recovered at a fixed cost per unit based on the budget annual production units.

YOU ARE REQUIRED:

Calculate the absorption costing profits for period 1 and for period 2 and show the over or under absorption of fixed manufacturing costs in each period;