Quick Answer: Which Cost Is An Example Of A Variable Cost Quizlet?

Which is an example of a variable cost?

Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs..

What is the difference between fixed costs and variable costs quizlet?

Fixed costs in total does not change within a relevant range as the level of output increases or decreases, whereas variable costs in total vary in direct proportion to changes in output within a relevant range.

Are groceries a variable expense?

Not all variable expenses are discretionary expenses, however. Variable expenses are defined as such because the amount you spend may vary each month. … Grocery shopping is also a variable expense. Your utility bills may also be variable expenses because they may change from month to month.

What are the categories of expenses?

There are three major types of financial expenses: Fixed, Variable, and Periodic. Fixed expenses are expenses that don’t change for long periods of time, like office rent or vehicle lease payments for you or your staff. Variable expenses change from month to month, such as utilities or meals and entertainment.

What is expenses and examples?

An expense is the cost of operations that a company incurs to generate revenue. As the popular saying goes, “it costs money to make money.” Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation.

Which of these is an example of a fixed cost?

The variable costs change from zero to $2 million in this example. The most common examples of fixed costs include lease and rent payments, utilities, insurance, certain salaries, and interest payments.

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.

Which is not a fixed cost?

Fixed costs are those which are fixed for the production period. Wages paid to workers however can vary as the number of workers increase or decrease. Hence it is not considered as a fixed cost.

What is variable cost per unit with example?

Common examples of variable costs in a firm are raw materials, wages, utilities, sales commissions, production taxes, and direct labor, among others. … The total variable cost increases and decreases based on the activity level, but the variable cost per unit remains constant with respect to the activity level.

What is the formula for variable cost?

Calculate total variable cost by multiplying the cost to make one unit of your product by the number of products you’ve developed. For example, if it costs $60 to make one unit of your product, and you’ve made 20 units, your total variable cost is $60 x 20, or $1,200.

What is the difference between direct cost and variable cost?

Direct costs and variable costs are similar in nature and are both types of costs involved in production. Direct costs are expenses that can be directly traced to a product, while variable costs vary with the level of production output.

What are three variable expenses?

What are Examples of Variable Costs?Direct materials. The most purely variable cost of all, these are the raw materials that go into a product.Piece rate labor. … Production supplies. … Billable staff wages. … Commissions. … Credit card fees. … Freight out.

How do you write down expenses?

Steps to Track Your ExpensesWrite down your monthly income.Write out your monthly expenses. Start with food, shelter (your mortgage or rent plus utilities), clothing, and transportation. … Make sure your income minus your expenses equals zero.

Is rent a variable expense?

Fixed cost includes expenses that remain constant for a period of time irrespective of the level of outputs, like rent, salaries, and loan payments, while variable costs are expenses that change directly and proportionally to the changes in business activity level or volume, like direct labor, taxes, and operational …

Is a cell phone bill a fixed or variable expense?

Fixed expenses are consistent and expected bills you pay each month, such as a mortgage or rent, a cellphone bill and a student loan payment. Car insurance, home insurance and life insurance are also fixed payments, along with your monthly electric and water bills.