Crate Express Co. produces wooden crates used for shipping products by ocean liner. In 2020, Crate Express incurred the following costs. Wood used in crate production $57,000 Nails (considered insignificant and a variable expense) $420 Direct labor $44,800 Utilities for the plant: $1,200 each month, plus $0.60 for each kilowatt-hour used each month Rent expense for the plant for the year $23,700 Assume Crate Express used an average 700 kilowatt-hours each month over the past year. (a) What is Crate Express's total manufacturing cost if it uses a variable costing approach

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Business

Carly Kirk

31 December, 11:42

Crate Express Co. produces wooden crates used for shipping products by ocean liner. In 2020, Crate Express incurred the following costs. Wood used in crate production $57,000 Nails (considered insignificant and a variable expense) $420 Direct labor $44,800 Utilities for the plant: $1,200 each month, plus $0.60 for each kilowatt-hour used each month Rent expense for the plant for the year $23,700 Assume Crate Express used an average 700 kilowatt-hours each month over the past year. (a) What is Crate Express's total manufacturing cost if it uses a variable costing approach

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Elaine Rose · Answer 1

manufacturing cost 102,220

Explanation:

The manufacturing cost will only consider materials and labor.

The manufacturing overhead will not capitalize through inventory as it is considered period cost.

wood 57,000

nails 420

Direct labor 44,800

Total: 102,220

The rest of the cost will be considered period cost as are not variable cost.