Understanding Fixed and Variable Expenses

Everyday expenses that a business has in it's daily operations are known as

• Operating expenses

• Exacting expenses

A type of operating expense that DOES NOT change regardless of the rate of production or the volume of sales is _______

• Fixed expense

• Variable expense

An expense that DOES CHANGE (or varies) based on how many items a business produces or sales they make is known as a _______

• Fixed expense

• Variable expense

Advertising (the amount of money you spend to promote your business, you will spend MORE if you are selling MORE products)

• Fixed expense

• Variable expense

Maintenance (fixing equipment or lights in your building)

• Fixed expense

• Variable expense

Utilities (your everyday water bill - not related to anything you are making to sell)

• Fixed expense

• Variable expense

Travel expenses (money you spend traveling to customers because you are selling more and more products)

• Fixed expense

• Variable expense

Insurance (the same payment you make every month to protect your business)

• Fixed expense

• Variable expense

Property taxes (the payment you make every year based on the property you own) (it doesn't change)

• Fixed expense

• Variable expense

Sales Commission (paying your employees MORE if they sell MORE products)

• Fixed expense

• Variable expense