TECHNOLOGICAL INSTITUTE of the PHILIPPINES
Quezon City
Production and Cost Analysis
Written Report
9/9/2015
Mr. Catalan, Jose Luis Alvin T.
Prepared by: Opawon, Irish L.
MM11FA1
Page |2
TECHNOLOGICAL INSTITUTE of the PHILIPPINES
Quezon City
Introduction
Mobile Phones are the most used gadget by almost everyone in this world. Whenever you turn
your head, you could see people holding onto their mobile phones everywhere. It’s, as if, that mobile
phones are already part of their life. In this generation it is not just called as “mobile phone” but “smart
phone” instead, where you can download applications and use internet anytime, everywhere. As the time
passes gadgets like mobile phones are becoming more and more convenient. Mobile phones are meant
to be used as a communicating device. Its main purpose is to call and text someone from a long distance.
Now it can also be a camera/videocam, an mp3 player, flashlight (not all), recorder, a gaming console,
and most likely a computer because you can use internet to open your accounts and browse/search from
the internet. Most of the mobile phones now are “touch screen”, where you can touch the screen and
press the icons, like pressing a button. Mobile phones is also known for its portability, when you say
portability, it can fit in your pocket, or in other words its handy, it is lightweight, you can carry your phone
everywhere, so you wouldn’t miss important calls, it is also good for emergency calls, and if you are lost
you can ask/search for the right direction (ex: google maps).Today mobile phones have become like
people’s best friend because it helps us a lot in many ways. Although mobile phones have a lot of
advantages it also has its disadvantages. Mobile phones releases electromagnetic waves that affect our
brain and it can also cause cancer. Mobile phones make our lives easier but it can also put our lives at
risk.
Our company wants to develop a phone that is easy to use, has a lot of features and most of all, a phone
that doesn’t affect one’s health. It is also in a style of a Smartphone, but the only difference is, it is safer to
use. Like the other phones it has a camera that you use to take photos and videos, an mp3 player and a
radio where you can listen to music every time, a recorder, internet browsers, and all of the Android
features. Producing these kinds of product truly helps everyone to prevent having cancer patients. We all
know that cancer is still incurable and many people have died and suffer from this disease. Developing a
device that is useful for everyone and at the same time prevent/helps everyone to reduce the risk of
getting cancer and other diseases would be remarkable to everyone and to the whole world. Phones
might be convenient and very useful to us, but there are risks that may harm our health without even
knowing it. We should use it wisely and when it’s necessary. We don’t need to show off, we need to be
mindful of the things that can affect us. Developing a phone that prevents electromagnetic waves from
entering through our brain is truly helpful, but we still need to be responsible and a wise smart phone
user. Mobile phones might be our best friend, but remember your best friend can be your best enemy, so
be responsible and wise smart phone user.
Production And Cost Analysis Written Report
Prepared by: Opawon, Irish L.
MM11FA1
TECHNOLOGICAL INSTITUTE of the PHILIPPINES
Quezon City
Cancer Free Smart phone
The variable cost and fixed cost are shown below:

Variable cost
 Labor
Workers
No. of
Workers
Salary per Workers a
month

Computer Engineers
5
₱50,000.00









Total
Electrical Engineers
Chemical Engineers
Office Workers/ Marketing/ Human Resource and etc.
Product Developers
Machine operators
Q.A.
Q.C.
Technicians
Others
5
5
20
15
20
25
25
25
30
175
₱ 45,000.00
₱ 40, 000.00
₱ 25,000.00
₱ 16,000.00
₱ 14,000.00
₱ 12,000.00
₱ 12,000.00
₱ 8,000.00
₱ 5,000.00
₱ 227,000.00
Labor cost = total no. of employee (total amount of the employees’ wages)
LC=175(227,000)
LC=39,725,000
 The labor cost is ₱ 39,725,000
 The variable cost is ₱ 39,725,000
The table above shows the different types of workers in the company, their population, and their salary
per month. You can observe that each type of workers receives a different amount of salary every month.
It is because it is determined based on how heavy their role is, in the company. Labor cost times their
salary per month will give you the total cost of labor. Since labor is the variable cost, the variable cost will
also be equal to ₱ 39,725,000, this is the total amount of labor in the company.
Production And Cost Analysis Written Report
Prepared by: Opawon, Irish L.
MM11FA1
TECHNOLOGICAL INSTITUTE of the PHILIPPINES
Quezon City

Fixed Cost
 Capital
Components
Costs
Land
Owned/ Bought
Product Materials/Raw Materials
₱ 20,000,000.00/month
Electricity
₱ 5,000,000.00/month
Water
₱ 50,000.00/month
Others. (Research and Development, fuel, real estate taxes
and etc.)
Total
₱ 8,000,000.00/month
₱ 33,050,000.00/month
 The Total cost of the capital is ₱ 33,050,000.00
 The Fixed cost is ₱ 33,050,000.00
The Capital is composed of Land, Material, Electricity, Water, and etc., that has a planned budget to pay
for every month and that is how it become fixed. The land is already owned, and the materials are already
set to make a certain number of products to be finished in a month depending on the market demand, it is
the same for the electricity. The budget for electricity is already fixed but it still depends on the market
demand, because the electricity that the company use to make the product is depending on the product
quantity and the product quantity is affected by the market demand. On the other hand, water is already
fixed, because it is really not necessary on making our product, we use it for some other things, but it can
still be changed, it depends if the price of the water in the market rises, remains the same, or decline. As
for the Research and Development, it is necessary to have a budget for this kind of thing because the
researches/ data help us to improve and develop our product especially we are making a smartphone that
doesn’t emit electromagnetic waves, which can cause cancer.
Production And Cost Analysis Written Report
Prepared by: Opawon, Irish L.
MM11FA1
TECHNOLOGICAL INSTITUTE of the PHILIPPINES
Quezon City
Production and Cost Analysis
 Cost Analysis
Formula:
Total Fixed Cost (TFC) = TC – TVC
Total Variable Cost (TVC) = TC – TFC
Total Cost (TC) = TFC + TVC
Average Fixed Cost (AFC) = TFC ÷ TP
Average Variable Cost (AVC) = TVC ÷ TP
Average Total Cost (ATC) = TC ÷ TP
Marginal Cost (MC) = ΔTC ÷ ΔTP
Legend








TP (Total Product)
TFC (Total Fixed Cost)
TVC ( Total Variable Cost)
TC (Total Cost)
AFC (Average Fixed Cost)
AVC (Average Variable Cost)
ATC (Average Total Cost)
MC (Marginal Cost)
TP
TFC
TVC
TC
AFC
AVC
ATC
0
1000
0
1000
0
0
0
50
1000
25
1025
20
0.5
20.5
120
1000
50
1050
8.3
0.4
8.75
180
1000
75
1075
5.56
0.4
5.97
220
1000
100
1100
4.54
0.45
5
MC
] 0.5
] 0.35
] 0.4
] 0.62
] 0.5
270
1000
125
1125
3.70
0.46
Production And Cost Analysis Written Report
Prepared by: Opawon, Irish L.
MM11FA1
4.16
TECHNOLOGICAL INSTITUTE of the PHILIPPINES
Quezon City
 Production Cost
Qty. of
Labor
TPP
APP
Formula:
0
0
-
Average Physical Product (APP) = TPP ÷
amount of input
25
50
2
Marginal Physical Product (MPP) = ΔTPP ÷
Δ Labor
50
120
2.4
Given:
75
180
2.4
Amount of Input = Quantity of Labor
100
250
2.5
125
325
2.6
150
375
2.5
175
375
2.1
200
365
1.8
225
345
1.5
TPP = Amount of Output
APP =?
MPP=?
MPP
]2
] 2.8
] 2.4
] 2.8
]3
]2
]0
] 0.4
] 0.8
As the quantity of labor increase and the Total
Physical product (TPP) increase, remains the
same then decrease, the Average Physical
Product (APP). It is also the same for the
marginal product. At some point the MPP falls.
Production And Cost Analysis Written Report
Prepared by: Opawon, Irish L.
MM11FA1