Crate Express Co. produces wooden crates used for shipping products by ocean liner. In 2022, Crate Express incurred the following costs.

Assume Crate Express used an average 500 kilowatt-hours each month over the past year.

Instructions
a. What is Crate Express's total manufacturing cost if it uses a variable costing approach?
b. What is Crate Express's total manufacturing cost if it uses an absorption costing approach?
c. What accounts for the difference in manufacturing costs between these two costing approaches?

Transcribed Image Text:

Wood used in crate production Nails (considered insignificant and a variable expense) Direct labor Utilities for the factory: $1,500 each month, plus $0.50 for each kilowatt-hour used each month Rent expense for the factory for the year $54,000 350 43,000 21,400