Question

Discuss the difference between fixed expenses and variable expenses as they relate to a budget.

Answer 1

Fixed expenses are those that dont change with changes in production level or sales volume, variable is the exact opposite.

Answer 2

Fixed expenses are expenses that stay the same for a person or a business. An example of a fixed expense is rent/mortgage. This expense doesn't change if you are only usig the building for 2 weeks or the entire month, its a set rate. A variable expense is an expense that changes like an electric bill, it varies based on the month and usage. When you budget, you can easily budget for your fixed expenses but you need to allow some room in your budget for expenses that change.