Question: What Are Fixed And Flexible Expenses?

What are flexible expenses?

A flexible expense is a discretionary purchase that can be altered or eliminated altogether without a significant downside.

Economists often use the term consumer discretionary spending to describe flexible expenses..

What are the 3 types of expenses?

There are three major types of expenses we all pay: fixed, variable, and periodic. Do you know the difference?

Is groceries a fixed expense?

Fixed expenses are your weekly, monthly, or annual bills that don’t fluctuate. These include things like mortgage or rent payments, car payments, insurance premiums, utility bills, and the average amount you spend on groceries.

What is an essential expense?

Essential expenses are expenses that are required for living. Non-essential expenses are the extra things you spend your money on. In addition, essential expenses may be broken down into fixed expenses and variable expenses. Essential Expenses – Fixed and Variable.

What expense is rent?

Rent expense is the cost incurred by a business to utilize a property or location for an office, retail space, factory, or storage space. Rent expense is a type of fixed operating cost or an absorption cost for a business, as opposed to a variable expense.

What are the normal monthly expenses?

Necessities often include the following:Mortgage/rent.Homeowners or renters insurance.Property tax (if not already included in the mortgage payment).Auto insurance.Health insurance.Out-of-pocket medical costs.Life insurance.Electricity and natural gas.More items…

What are the 4 types of expenses?

Terms in this set (4)Variable expenses. Expenses that vary from month to month (electriticy, gas, groceries, clothing).Fixed expenses. Expenses that remain the same from month to month(rent, cable bill, car payment)Intermittent expenses. … Discretionary (non-essential) expenses.

Is salary a fixed or variable cost?

Variable costs vary with increases or decreases in production. Fixed costs remain the same, whether production increases or decreases. Wages paid to workers for their regular hours are a fixed cost. Any extra time they spend on the job is a variable cost.

Is electricity bill a fixed cost or variable cost?

Classification of Utilities With the former, electricity is a variable cost, changing monthly as usage increases or decreases with production and profit. With the latter, electricity is a fixed cost, as the usage remains the same no matter what and does not affect profit.

Which item is 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 is a fixed monthly expense?

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)

What is other expenses in accounting?

Other expenses are expenses that do not relate to a company’s main business. As well as operating costs, the company needs to consider other expenses including interest expense and losses from disposing of fixed assets. Examples of other expenses include interest expense and losses from disposing of fixed assets.

What is an example of a fixed expense?

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

What is the difference between a flexible expense and a fixed expense?

Whats the difference between “fixed” and “flexible” expenses? Fixed: expenses that are the same every month. … Flexible: expenses that can change from month to month.

What’s considered a fixed expense?

What Are Your Fixed Expenses? Typical fixed expenses include car payments, mortgage or rent payments, insurance premiums and real estate taxes. Typically, these expenses can’t be easily changed. … When you lower your fixed expenses, you automatically save more money each month or pay period.

What is a fixed expense in math?

Expenses that you must pay regularly and are the same amount each time are fixed. expenses. Expenses that you do not have to pay regularly or whose amount can change are variable.

Is a credit card a fixed expense?

Pay Off Debt Faster Creating a fixed expense can work to pay credit cards off faster too. When you pay on your credit card, the minimum payment amount goes down each month. … In addition, it’ll increase the amount of interest you pay each month. Instead, choose to pay a fixed amount on your credit cards each month.

Is an electricity bill a fixed expense?

Some utilities, such as electricity, may increase when production goes up. However, utilities are generally considered fixed costs, since the company must pay a minimum amount regardless of its output.

Which expense is considered a fixed discretionary expense?

While non-discretionary expenses are considered mandatory—housing, taxes, debt, groceries—discretionary expenses are any costs incurred above and beyond what is deemed necessary. These are generally considered wants, while non-discretionary expenses are usually referred to as needs.

How do you classify expenses?

Types of ExpensesOperating. Cost of Goods Sold (COGS) It includes material cost, direct. Marketing, advertising, and promotion. Salaries, benefits, and wages. Selling, general, and administrative (SG&A) It includes expenses such as rent, advertising, marketing. … Non-operating. Interest. Taxes. Impairment charges.