Required: Part. $1$: $(10$ points$)$ Identify the fixed, variable, production and non$-$production costs. Prepare the statement of profit or loss for the first three quarters using variable and absorption costing. Explain the reasons for: $($a$)$ No changes in operating profit in variable and absorption costing in the first quarter. The difference in operating profit for the second quarter. The difference in operating profit for the third quarter. Part. $2$: $(10$ points$)$ According to Manuel's partners, sales demand will be affected by seasonal variations and they have the option to build up inventory in order to prepare for the high season. Which costing method is more suitable in this case? Imagine that in the second quarter, the business partners decide to produce more I$-$shirts than the actual sales demand in order to stockpile inventory for an anticipated high season. However, actual demand in the second quarter turns out to be lower than expected, leading to a substantial increase in closing inventory. Manuel, who is responsible for preparing the financial statements, notices that profits under absorption costing appear higher than those calculated using variable costing for the same period, creating confusion among his business partners. Critically evaluate the advantages and disadvantages of both costing methods in the context of a business with seasonal fluctuations. From a managerial perspective, which costing method provides more useful information for decision$-$making in a business with seasonal demand?