Crate Express Co. produces wooden crates used for shipping products by ocean liner. In 2025, Crate Express incurred the following costs.

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

Instructionsa. 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?

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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