Acc – creative crates co. produces wooden crates

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

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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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