Hi, Question A is completely correct. Please just answer question B.

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 manufactures dies to its customers' specifications and therefore uses a job-order cost system. Factory overhead is applied to the jobs based on direct labour hours-the absorption-costing (full) method. Overapplied or underapplied overhead is treated as an adjustment to Cost of Goods Sold. The company's income statements and other data for the last two years are as follows: DANIELS TOOL & DIE CORPORATION 2015-2016 Comparative Income Statements 2015 2016 Sales $833,900 $1,015, 100 Cost of goods sold Finished goods, January 1 24,000 17,800 Cost of goods manufactured 544,600 654,400 Total available 568,600 672,200 Finished goods, December 31 17,800 13,300 Cost of goods sold before overhead adjustment 550,800 658,900 Underapplied factory overhead 35,800 14,100 Cost of goods sold 586,600 673,000 Gross profit 247,300 342,100 Selling expenses 81,900 94,500 Administrative expenses 69,000 74,400 Total operating expenses 150,900 168,900 Operating income $96,400 $173,200 Daniels Tool & Die Corporation Inventory Balances January 1, 2015 December 31, 2015 Raw material $21,700 $29,900 Work in process $40,500 $47,700 Direct labour hours (used in WIP) 1,350 1,630 Finished goods $24,000 $17,800 Direct labour hours (used in FG) 1,470 1,010 December 31, 2016 $10,400 $63,400 2,280 $13,300 840 Daniels used the same predetermined overhead rate in applying overhead to its production orders in both 2015 and 2016. The rate was based on the following estimates: Fixed factory overhead Variable factory overhead Direct labour hours (used in WIP) Direct labour costs (used in FG) $24,790 $153,698 24,790 $148,740 In 2015 and 2016, the actual direct labour hours used were 20,200 and 23,800, respectively. Raw materials put into production were $291,500 in 2015 and $370,600 in 2016. The actual fixed overhead was $42,300 for 2015 and $23,240 for 2016, and the planned direct labour rate was the direct labour achieved. For both years, all of the administrative costs were fixed. The variable portion of the selling expenses results from a 5% commission that is paid as a percentage of the sales revenue. In order to apply variable costing to the Daniels Tool & Die operations, it is necessary to first remove fixed manufacturing costs from the inventory values and the cost of goods sold. Fixed MOH per unit = $24,790 = 24,790 DLH = $1.00 per DLH Beginning finished goods inventory: Using absorption costing Less: Fixed MOH included (1,010 hours x $1.00) Using variable costing $17,800 1,010 $16,790 Ending finished goods inventory Using absorption costing Less: Fixed MOH included (840 hours x $1.00) Using variable costing $13,300 840 $12,460 Beginning work in process inventory: Using absorption costing Less: Fixed MOH included (1,630 hours x $1.00) Using variable costing $47,700 1,630 $46,070 Ending work in process inventory Using absorption costing Less: Fixed MOH included (2,280 hours x $1.00) Using variable costing $63,400 2,280 $61,120 Variable cost of goods manufactured: Raw materials put into production Direct labour [23,800 x ($148,740 24,790)] Variable overhead [23,800 x ($153,698 - 24,790)] Total variable manufacturing costs Plus: Variable beginning work in process $370,600 142,800 147,560 660,960 46,070 707,030 61,120 $645,910 Less: Variable ending work in process Variable cost of goods manufactured Variable cost of goods sold: Variable beginning finished goods inventory Plus: Variable cost of goods manufactured Variable cost of goods available for sale Less: Variable ending finished goods inventory Variable cost of goods sold $16,790 645,910 $662,700 12,460 $650,240 Sales commissions (5% x Sales) $50,755 Selling & Admin ($94,500 $50,755 + $74,400) = $118,145 (b) Reconcile the difference in operating income between Daniels Tool & Die Corporation's 2016 absorption-costing income statement and the revised 2016 income statement prepared under variable costing. (Round answers to 0 decimal places, e.g. 5,275.) Variable costing operating income $ FMOH deferred in work in process Inventory FMOH released from finished goods inventory Absorption costing operating income $