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Problem 8-35A (Part Level Submission) 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: 2016 $1,015,800 DANIELS TOOL & DIE CORPORATION 2015-2016 Comparative Income Statements 2015 Sales $833,700 Cost of goods sold Finished goods, January 1 24,800 Cost of goods manufactured 548,100 Total available 572,900 Finished goods, December 31 17,400 Cost of goods sold before overhead adjustment 555,500 Underapplied factory overhead 35,500 Cost of goods sold 591,000 Gross profit 242,700 Selling expenses 81,700 Administrative expenses 69,000 Total operating expenses 150,700 Operating income $92,000 17,400 654,100 671,500 14,000 657,500 14,300 671,800 344,000 94,700 74,000 168,700 $175,300 Daniels Tool & Die Corporation Inventory Balances January 1, 2015 December 31, 2015 December 31, 2016 Raw material $21,400 $29,800 $11,000 Work in process $40,400 $48,000 $63,500 Direct labour hours (used in WIP) 1,330 1,640 2,200 Finished goods $24,800 $17,400 $14,000 Direct labour hours (used in FG) 1,520 1,040 830 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) $24,750 $153,450 24,750 $149,500 In 2015 and 2016, the actual direct labour hours used were 20,700 and 23,300, respectively. Raw materials put into production were $291,900 in 2015 and $370,000 in 2016. The actual fixed overhead was $42,800 for 2015 and $29,640 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. (a) For the year ended December 31, 2016, prepare a revised income statement for Daniels Tool & Die Corporation using the variable-costing method. (Round answers to O decimal places, e.g. 5,275.) Daniels Tools & Die Corporation Variable Costing Income Statement For the year ended December 31, 2016