Absorption Costing Q4. Michael Klein started Design T-Shirts Ltd. about a year ago. Th normal job order costing system. Each job represents an order from a customer. Customers typically provide specific designs for each order of T shirts. In the month of October 2017 Calvin received the following summary report from the job cost sheets. The direct labor rate was $25 per hour. Factory overhead was applied at the rate of $15 per direct labor hour. Actual factory overheads in October were $20,000. e company currently uses a Beginning Inventories: Direct Materials Work in Process (Job #521) Finished Goods (Job #500) $32,000 $23,000 $25,000 Materials Purchased Materials Issued to Production: Direct Materials $45,000 Job #521 | Job #522 Job #523 $12,000 $14,000 $15,000 Factory Labor Costs: I Job #521 Job #522 Job #523 $13,000 $17,000 9,000 Direct Labor ther Operating Costs Incurred: Selling and Administrative Expenses Jobs #521 and #522 were completed in October. Job#500 and 1,000 of the 10,000 T-shirts in Job #521 were sold for a total sales value of $100,000. The company applies the direct method to close out the over- or under-applied factory overheads against Cost of Goods Sold. 1) Calculate over-or under-applied overheads: 2) Calculate cost of goods sold before adjustment 3) Calculate net operating income after adjusting for the over-or under-applied overheads