Question

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
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Answer 1

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Daniels Tools and Dies Corporation Variable Costing Income Statement For the year ended December 31, 2016 $1,015,800 Sales Less: Variable Cost Variable cost of goods sold Variable Selling expense-5% Total variable cost Contribution LESS: Fixed Expenses $642,160 $50,790 $692,950 $322,850 Factory overheads Selling expenses Administration expenses Total Fixed cost Net Operating Income $29,640 $43,910 $74,000 $147.550 $175,300 Working note Variable cost of goods sold Direct material Direct Labor $388,800 $141,060 Variable overheads Variable COGS $112,300 $642,160 Raw Material used in production opening inventory Purchase Raw material available $29,800 $370,000 $399,800 $11,000 $388,800 Less: Closing inventory Raw material consumed Direct labor rate $148,500 24,750 Labor cost $6.00 Labor hours Direct Labor hours used for production Opening DL hours for FG Production DL hours 1,040 23,300 24,340 830 Closing DL hours for FG labor hours for production Direct labor hour rate Direct Labor cost 23,510 $6.00 $141,060 Calculation of Factory overheads $671,800 $388,800 $141,060 $141,940 A Total COGS Less: Raw material consumed Direct Labor cost Factory overheads |Actual fixed factory overheads Variable factory overheads $29,640 B $112,300 A-B