Problem 8.35A a-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. Over-applied 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: 2020 $1,016,000 DANIELS TOOL & DIE CORPORATION 2019-2020 Comparative Income Statements 2019 Sales $837,700 Cost of goods sold Finished goods, January 1 24,100 Cost of goods manufactured 544,900 Total available 569,000 Finished goods, December 31 17,600 Cost of goods sold before overhead adjustment 551,400 Under-applied factory overhead 35,400 Cost of goods sold 586,800 Gross profit 250,900 Selling expenses 81,100 Administrative expenses 69,000 Total operating expenses 150,100 Operating income $100,800 17,600 669,980 687,580 13,800 673,780 14,300 688,080 327,920 94,500 74,500 169,000 $158,920 Daniels Tool & Die Corporation Inventory Balances December 31, 2018 December 31, 2019 Raw material $21,700 $29,100 Work in process $40,600 $47,400 Direct labour hours (used in WIP) 1,570 Finished goods $24,100 $17,600 Direct labour hours (used in FG) 1,470 1,100 December 31, 2020 $10,300 $63,200 2,190 $13,800 830 1,300 Daniels used the same predetermined overhead rate in applying overhead to its production orders in both 2019 and 2020. The rate was based on the following estimates: Fixed factory overhead Variable factory overhead Direct labour hours Direct labour costs $24,540 $152,148 24,540 $147,240 In 2019 and 2020, the actual direct labour hours used were 20,400 and 23,900, respectively. Raw materials put into production were $291,200 in 2019 and $370,300 in 2020. The actual fixed overhead was $42,800 for 2019 and $38,200 for 2020, 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. For the year ended December 31, 2020, prepare a revised income statement for Daniels Tool & Die Corporation using the variable-costing method. Daniels Tools & Die Corporation Variable-Costing Income Statement $ $ LINK TO TEXT LINK TO TEXT LINK TO TEXT Reconcile the difference in operating income between Daniels Tool & Die Corporation's 2020 absorption-costing income statement and the revised 2020 income statement prepared under variable costing. Variable-costing operating income $ FMOH deferred in work in process Inventory FMOH released from finished goods inventory Absorption-costing operating income