5P8.3}5A (LO 1, 2, 3) The Daniels Tool & Die Corporation has been in existence for a little over three - years. The company's sales have been increasing each year as it builds a reputation. The company manu- . factures dies to its customers' specications and therefore uses a job-order cost system. Factory overhead is applied to the jobs based on direct labour hoursthe absorption-costing (full) method. Overapplied or under-applied overhead is treated as an adjustment to cost of goods sold. The company's income statements and other data for the past two years are as follows: DANIELS TOOL & DIE CORPORATION 20192020 Comparative Income Statements 2019 2020 Sales $840,000 $1,015,000 Cost of goods sold Finished goods, January 1 25,000 18,000 Cost of goods manufactured _ 548,000 657,600 Total available 573,000 675,600 Finished goods, December 31 __18,000 14,000 Cost of goods sold before overhead adjustment 555,000 661,600 Under-applied factory overhead 36,000 14,400 Cost of goods sold 591,000 676,000 Gross prot 249,000 339,000 Selling expenses 82,000 95,000 Administrative expenses 70,000 75,000 Total operating expenses 152,000 170,000 Operating income 33 97,000 $ 169,000