Creative Crates Co. produces wooden crates used for shipping products by ocean liner. In 2014, Creative incurred the following costs.
Wood used in crate production $56,610
Nails (considered insignificant and a variable expense) $520
Direct labor $42,020
Utilities for the plant:
$3,000 each month,
plus $0.48 for each kilowatt-hour used each month
Rent expense for the plant for the year $25,120
Assume Creative used an average 800 kilowatt-hours each month over the past year.
(a) What is Creative’s total manufacturing cost if it uses a variable costing approach?
Total manufacturing costs (b) What is Creative’s total manufacturing cost if it uses an absorption costing approach?
Total manufacturing costs
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