Answer:
Total monthly fixed and variable costs:
a) Monthly Fixed costs:
Rent for building = $15,000
Fixed expenses = 40,000
Total fixed costs = $55,000
b) Variable costs = $25 per phone
Total phones produced = 2,000
Total variable costs = 2,000 * $25
= $50,000
Explanation:
a) Data:
Quantity of phones per month = 2,000
Variable cost per phone = $25
Selling price per phone = $130
Monthly Rent for building = $15,000
Fixed Expenses = $40,000
b) The company's fixed costs are the expenses that are constant over a period of time. The unit fixed costs varies with the level of production while the total remains constant. Example is the monthly rent for building, which is $15,000. The variable costs are the costs the company incurs which vary according to the level of production or activities. The unit cost remains constant while the total variable costs changes.
