Fixed and Variable Expenses

Fixed and Variable Expenses

Expenses = Cost = Money you spend

Multiple Choice

Emily sells her art online. She sells each painting for $32 each. Emily spends $5 on paint and $10 on the canvas. Last month, she sold 27 paintings. What is her profit margin?

• $405

• $864

• 53.1%

• $459

Yesterday we talked about profit and profit margin.

Remember:

• Larger profit margin = more money (profit) for you :)

• Smaller profit margin = less money (profit) for you :(

But how do you we make profit?!?

First you need to know how much money you will spend (EXPENSES!!).

Fixed Expenses

Costs or expenses that don't change from month to month.

• Rent

• Phone bills

• Insurance

• Loans

• Anything that Auto-pays!!!!

Multiple Choice

What are fixed expenses?

• Irregular expenses that change from week to week or month to month

• The amount of money in your bank account

• The amount of cash in your purse or wallet

• Expenses that stay the same from week to week or month to month

Variable Expenses

Expenses that can change over time.

These costs vary depending on your usage of products or service.

• Raw Materials

• Labor

• Travel (gas and milage)

• Shipping Costs

• Special projects/Upgrades

Multiple Choice

What are variable expenses?

• Irregular expenses that change from week to week or month to month

• The amount of money in your bank account

• Costs that do not fluctuate from week to week or month to month

• The amount of cash in your purse/wallet

Multiple Choice

Dara makes bracelets and sells them in her shop. Which is a fixed expense for Dara’s business?

• the cost of the beads

• the cost of the string

• the cost of advertising

• rent for her shop

Multiple Choice

Mario paid off his car loan this year. His payments were $259 a month for each of the first 8 months. The last payment, in the ninth month, was $125. Are the payments Mario paid during the first 8 months fixed or variable?

• Fixed, because the amount did not change from month to month

• Variable, because the amount changed from month to month

Multiple Choice

Every month, Jack’s mother pays the following expenses: the house payment, the club membership, the car payment, and the cost of food. Which is a variable expense?

• the house payment

• the cost of food

• the club membership

• the car payment

Multiple Choice

True or false:

After school snacks are a fixed expense.

• True

• False

Multiple Choice

Is a business trip to advertise your product a fixed or a variable expense?

• fixed

• variable

• Neither fixed nor variable

• Both fixed and variable

Multiple Choice

Is a cell phone bill a fixed or variable expense?

• Fixed

• Variable

• Both fixed and variable

• Neither fixed nor variable