What is a fixed expense quizlet?

Money paid for goods and services. Fixed Expense. Expense that stays the same from month to month. Variable Expense. Expense that changes from month to month.

Fixed Expenses. Expenses that are the same from month to month. Fixed Variable Expenses. Cost that you must pay each month but the amount differ, i.e. electric bill.

Also Know, how are fixed expenses different from variable expenses quizlet? Terms in this set (4) Fixed costs do not change when the business changes its level of output e.g. rent, rates and salaries. Variable costs change with the business’s level of output e.g. fuel costs, wages, raw materials and components.

Consequently, what is an example of a fixed expense?

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.

What are fixed and variable expenses?

Variable costs vary based on the amount of output, while fixed costs are the same regardless of production output. Examples of variable costs include labor and the cost of raw materials, while fixed costs may include lease and rental payments, insurance, and interest payments.

What are variables expenses?

Variable expenses, also called variable costs, are expenses that can change depending on your use of products or services; they are somewhat unpredictable. Variable expenses differ from fixed expenses, such as your mortgage or rent, that remain the same throughout the term of your loan or lease.

How do you define income?

Income is money (or some equivalent value) that an individual or business receives in exchange for providing a good or service or through investing capital. Income is used to fund day-to-day expenditures. For individuals, income is most often received in the form of wages or salary.

What is a discretionary expense?

A discretionary expense is a cost that a business or household can get by without, if necessary. These expenses are often defined as things that are “wants” rather than “needs.” For example, a business may allow employees to charge certain meal and entertainment costs to the company.

What is variable expense quizlet?

Money paid for goods and services. Fixed Expense. Expense that stays the same from month to month. Variable Expense. Expense that changes from month to month.

Is research and development a fixed cost?

Fixed costs are not permanently fixed; they will change over time, but are fixed, by contractual obligation, in relation to the quantity of production for the relevant period. Examples of discretionary costs are advertising, insurance premia, machine maintenance, and research & development expenditures.

What are normal monthly expenses?

To help you get it right, we’ve assembled a list of the most common average monthly expenses. 20 Common Monthly Expenses Housing. Your costs will vary significantly depending on where you live. Transportation. Food? Utility bills. Cell phone. Childcare and school costs. Pet food. Pet insurance.

Is Amortization a fixed cost?

Amortization. This is the gradual charging to expense of the cost of an intangible asset (such as a purchased patent) over the useful life of the asset. This is only a fixed cost if a fixed interest rate was incorporated into the loan agreement. Property taxes.

Are operating expenses fixed costs?

Definition: Fixed costs are those expenses that do not change regardless of the business revenue. Typically found in operating expenses such as Sales General and Administrative, SG&A. Items that are usually considered fixed costs are rent, utilities, salaries, and benefits.

What are fixed monthly expenses?

The definition of fixed expenses is “any expense that does not change from period to period,” such as mortgage or rent payments, utility bills, and loan payments. Here is a list of categories to include in your fixed expenses: Mortgage(s) Rent. Property taxes (if paying monthly)

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

Since they stay the same throughout the financial year, fixed costs are easier to budget. They are also less controllable than variable costs because they’re not related to operations or volume. Variable costs, however, change over a specified period and are associated directly to the business activity.

Is interest expense a fixed cost?

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

Why are fixed costs important?

Fixed costs are an important part of profit projections and the calculation of break-even points for a business or project. In some cases, high fixed costs discourage new competitors from entering a market and/or help eliminate smaller competitors (that is, fixed costs can be a barrier to entry).

What is a fixed expense provide at least three examples?

Some examples of fixed costs include rent, insurance premiums, or loan payments. Fixed costs can create economies of scale, which are reductions in per-unit costs through an increase in production volume. This idea is also referred to as diminishing marginal cost.

What is the best definition of a fixed variable cost?

Understanding a Variable Cost Fixed costs are expenses that remain the same regardless of production output. Whether a firm makes sales or not, it must pay its fixed costs, as these costs are independent of output. Examples of fixed costs are rent, employee salaries, insurance, and office supplies.