Based on the following assumptions, calculate the total monthly fixed and variable costs for a company that manufactures cellular phones. The company produces 2,000 cellular phones a month
Cost to make each cellular phone is $25
A phone Cellular Phones are sold for $130
A phone Monthly Rent for the Building is $15,000
Fixed expenses are $40,000

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.