What is fixed and variable expense with example?

Sasha Guarnera asked, updated on March 28th, 2022; Topic: variable cost
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Fixed costs are time-related i.e. they remain constant for a period of time. Variable costs are volume-related and change with the changes in output level. Depreciation, interest paid on capital, rent, salary, property taxes, insurance premium, etc. Commission on sales, credit card fees, wages of part-time staff, etc.

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Beside, what are examples of variable expenses?

Examples of Household Variable Expenses

  • The cost of household maintenance such as painting or yard care.
  • General expenses such as clothing, groceries, and car maintenance.
  • Resource expenses such as fuel, electricity, gas, and water.
  • Other expenses such as entertainment or dining out.

In every case, what are examples of fixed expenses? Examples of Fixed Expenses

  • Rent or mortgage payments.
  • Renter's insurance or homeowner's insurance.
  • Cell phone service.
  • Internet service.
  • Health, disability or life insurance premiums.
  • Property taxes.
  • Childcare expenses.
  • Student loan or car loan payments.

Afterall, what are 4 examples of fixed expenses?

Common examples of fixed costs include rental lease or mortgage payments, salaries, insurance, property taxes, interest expenses, depreciation, and potentially some utilities.

Is gas a fixed expense?

Utilities– the cost of electricity, gas, phones, trash and sewer services, etc. ... However, utilities are generally considered fixed costs, since the company must pay a minimum amount regardless of its output.

27 Related Questions Answered

Is gas a variable expense?

Variable expenses are defined as such because the amount you spend may vary each month. ... Buying gas for your car each month is a variable expense, as are car repairs and maintenance. Grocery shopping is also a variable expense.

What is considered fixed expenses?

Fixed expenses: These are costs that largely remain constant, such as your monthly rent. Variable expenses: These are costs that vary or are unpredictable, such as dining out or car repairs.

Is rent a fixed expense?

Fixed costs remain the same regardless of whether goods or services are produced or not. ... The most common examples of fixed costs include lease and rent payments, utilities, insurance, certain salaries, and interest payments.

What are 5 examples of variable expenses?

What are Examples of Variable Costs?
  • Direct materials. The most purely variable cost of all, these are the raw materials that go into a product.
  • Piece rate labor. ...
  • Production supplies. ...
  • Billable staff wages. ...
  • Commissions. ...
  • Credit card fees. ...
  • Freight out.

What is variable spend?

Variable expenses are costs that change over time, such as groceries or movie tickets. Because these costs might fluctuate over a week, month or year, it can be challenging to pinpoint what you'll spend. These costs might fluctuate over a week, month or year.

What are non variable expenses?

Fixed expenses or costs are those that do not fluctuate with changes in production level or sales volume. They include such expenses as rent, insurance, dues and subscriptions, equipment leases, payments on loans, depreciation, management salaries, and advertising.

How do you calculate variable expenses?

To calculate variable costs, multiply what it costs to make one unit of your product by the total number of products you've created. This formula looks like this: Total Variable Costs = Cost Per Unit x Total Number of Units.

Is a student loan a variable expense?

A fixed expense is an expense that stays the same every single month. Some examples of fixed expenses you may have can include: Your mortgage or rent payment. The payment for your car, student loan or other installment loan.

What is another name for variable cost?

Variable costs are sometimes called unit-level costs as they vary with the number of units produced. Direct labor and overhead are often called conversion cost, while direct material and direct labor are often referred to as prime cost. In marketing, it is necessary to know how costs divide between variable and fixed.

Is a phone bill a fixed expense?

What Are Fixed Expenses? Fixed expenses are consistent and expected bills you pay each month, such as a mortgage or rent, a cellphone bill and a student loan payment. Car insurance, home insurance and life insurance are also fixed payments, along with your monthly electric and water bills.

Is electricity a variable cost?

Electricity is a good example of a semi-variable cost. The base rate for service may be constant, but as production grows, power consumption and the company's electricity bills go up. In other words, there is both a fixed and variable aspect to semi-variable costs.

What are three examples of variable expenses?

Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs.

What is fixed variable?

Introduction to Fixed and Variable Costs. Cost is something that can be classified in several ways, depending on its nature. ... Fixed costs do not change with increases/decreases in units of production volume, while variable costs fluctuate with the volume of units of production.

Is entertainment a fixed or variable expense?

Variable expenses include such things as groceries, gas for your vehicle, utilities, entertainment expenses, and clothing. By keeping track of these expenses over time, you can get a better idea of how much you're spending each month and plan accordingly.

What are intermittent expenses?

Intermittent Expenses” are those that occur once a year or irregularly, like car registration, tax payments, auto or home repairs or vacations. We have found that most clients are pretty good at predicting and managing their regular monthly expenses.

Is salary a fixed cost?

Any employees who work on salary count as a fixed cost. They earn the same amount regardless of how your business is doing. Employees who work per hour, and whose hours change according to business needs, are a variable expense.

How do you determine fixed and variable costs?

Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.

What are examples of fixed costs and variable costs for a pizza shop?

For a pizza shop, costs such as rent, kitchen equipment, security system, dining room furniture, music and lights all are considered as fixed costs. Some costs such as labor and food (cheese, vegetables) because they are market commodities and their price may vary that is why they are considered as variable costs.

What are the fixed costs in a business?

Fixed costs can include property taxes, rent, salaries and the cost of benefits for non-sales and management personnel. They are one of three types of costs incurred by most businesses. The others are variable and semi-variable costs.

What is the formula of TFC?

Fixed Cost Formula Identify your building rent, website cost, and similar monthly bills. ... Add up each of these costs for a total fixed cost (TFC). Identify the number of product units created in one month. Divide your TFC by the number of units created per month for an average fixed cost (AFC).

What are fixed expenses for a student?

A fixed expense is basically a 'need' item. The biggest fixed expenses you'll have in college are tuition, room and board, as well as your car payment (if you have one), car insurance premiums (if you have a car), as well as your wireless plan and internet service.

Are textbooks a variable expense?

Variable costs:Variable costs are costs that change with fluctuations in enrollment. ... Likewise, a reduction in enrollment will lower variable costs. A few examples include textbooks and supplies, software licenses, salaries and benefits for school personnel, and supplies for food services.

Is dog food a fixed or variable expense?

A variable expense is the opposite. It is anything that you pay for that isn't a set amount every month. This could be groceries, Starbucks, toiletries, that cute pair of shoes you couldn't live without, or even the expensive dog food you feed to your spoiled pup, Nuggett.

What is a fixed expense in math?

Fixed Cost refers to the cost or expense that is not affected by any decrease or increase in the number of units produced or sold over a short-term horizon. ... Fixed cost is one of the two major components of the total cost of production. The other component is the variable cost.

Is Prime cost a variable cost?

A prime cost is the total direct costs, which may be fixed or variable, of manufacturing an item for sale. ... Indirect costs, such as utilities, manager salaries, and delivery costs, are not included in prime costs.

Is income tax a fixed or variable cost?

expenses that remain constant in total regardless of changes in activity within a relevant range. Examples are rent, insurance, and taxes.

Is cable TV a variable expense?

Fixed expenses are consistent and expected bills you pay each month, such as a mortgage or rent, a cellphone bill and a student loan payment. ... A digital subscription to a newspaper and monthly cable or streaming services are additional fixed costs.