Hardwood Inc. produces wooden crates used for shipping products by ocean liner. In 2010, Hardwood incurred the following costs. Wood used in crate production $54,460
- Nails (considered insignificant and a variable expense) $480
- Direct labor $38,770
- Utilities for the plant:
- $2,900 each month,
- plus $0.50 for each kilowatt-hour used each month
- Rent expense for the plant for the year $21,870
Assume Hardwood used an average 500 kilowatt-hours each month over the past year.
What is Hardwood's total manufacturing cost if it uses an absorption costing approach?
What is Hardwood's total manufacturing cost if it uses a variable costing approach?