$2$UESTION $2$

The finance director $($FD$)$ has been tasked by the board to calculate the profit of changin costing system from variable to absorption costing. The FD has requested you ga necessary information and provide the relevant calculations.

You obtained the following information:

$\backslash$table$[[$Detail$,],[$Units produced$/$manufactured during the period,$32,000],[$Units sold during the period,$27,000],[$Variable cost per unit,R$100],[$Selling price per unit,R$250],[\backslash$table$[[$Total fixed costs for the period $($NB: Includes$],[$R $960,000$ fixed manufacturing costs$)]],$R$1,500,000]]$

$2\mathrm{.}1$ Compare the profitability of the two costing systems.

$2\mathrm{.}2$ Explain the difference in profitability in the previous question

$2\mathrm{.}3$ would happen to profit figures in period $2$ if $27,000$ units are manufactured and $32,000$ units are sold, considering $5,000$ units of initial inventory from period $1$

$2\mathrm{.}4$ Which costing system would you recommend and why?