An expense is variable when its total amount changes in proportion to the change in sales, production, or some other activity. In other words, a variable expense increases when an activity increases, and it decreases when the activity decreases. Examples of Variable Expenses Assume that a web...
Examples of Expense Some of the expenses that will be reported on a retailer’s income statement for the month of August include: Cost of goods sold for the August sales. (The date that the retailer had paid for the goods is not pertinent.) Commissions earned by the sales staff for havin...
Now that you understand the differences between fixed and variable expenses, you can build a budget that helps you control your spending and meet your financial goals. When you know exactly where your money is going, you can take steps to shed unnecessary expenses, plan for the unexpected, and...
What Are Some Semi-Variable Administrative Expenses? Semi-variable administrative expenses can include salaries, audit and legal fees, vehicle use, and commissions. They can also include utility costs that charge a base amount due plus an extra expense associated with usage.3 What Is Depreciation in...
Fixed vs. variable expenses Fixed and variable expenses are part of your general ledger, which is how businesses keep track of their finances. A fixed expense means one that doesn’t change — it’s a set amount you pay on a recurring basis. A variable expense, on the other hand, may ...
To calculate variable cost: add together all fluctuating expenses outlined above within a specified period of time. The implication of high variable costs for a company is more room for fluctuation in production output while still maintaining profitability. Conversely, companies with high variable costs...
Variable Overhead Costs Examples of variable overhead include: Production supplies Utilities to run equipment and the facility Wages for those handling and shipping the product Raw materials Sales commissions for workers Variable overhead costscan include pay for workers added when production is increased...
Definition and Examples of a Flexible Expense Flexible expenses, also known as variable expenses, are costs you pay that can change from week to week or month to month. As a consumer, you most likely understand that an expense is a cost you pay for products and services that you buy ...
Variable Cost Examples The formula for the variable cost is simple because all of the organization's different types of variable expenses must be added together. For instance, a juice company makes 20 bottles of juice, which costs Rs. 500 for raw materials, Rs. 900 for direct labor, and Rs...
What is the definition of variable cost per unit?Variable costs are costs which are directly related to the changes in the quantity of output; therefore,variable costsincrease when production grows, and decline when production contracts. Common examples of variable costs in a firm areraw materials...