Fixed vs. Variable Expenses Flashcard

Front

What is a fixed expense?

Back

A fixed expense is a cost that does not change regardless of the level of goods or services produced. Examples include rent and insurance.

Front

What is a variable expense?

Back

A variable expense is a cost that varies depending on the level of goods or services produced. Examples include groceries and gas.

Front

Give an example of a fixed expense.

Back

An example of a fixed expense is rent.

Front

Give an example of a variable expense.

Back

An example of a variable expense is clothes shopping.

Front

How do fixed expenses affect budgeting?

Back

Fixed expenses are predictable and help in creating a stable budget since they remain constant each month.

Front

How do variable expenses affect budgeting?

Back

Variable expenses can fluctuate, making budgeting more challenging as they can change from month to month.

Front

Is car insurance a fixed or variable expense?

Back

Car insurance is a fixed expense.

Front

Is gas for your car a fixed or variable expense?

Back

Gas for your car is a variable expense.

Front

What is the main difference between fixed and variable expenses?

Back

The main difference is that fixed expenses remain constant, while variable expenses can change.

Front

Why is it important to distinguish between fixed and variable expenses?

Back

Distinguishing between fixed and variable expenses helps in effective budgeting and financial planning.