Reference no: EM131988568

Question - 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?

(b) What is Creative's total manufacturing cost if it uses an absorption costing approach?