Question

What is most likely the reason variable expenses should be planned after fixed expenses

Answer 1

Variable expenses should be planned after fixed expenses because "fixed expenses are required and constant, but variable expenses are not required and are more flexible".

Your financial plan is contained both fixed and variable expenses. Fixed costs or expenses are those that don't vacillate with changes underway level or sales volume. Variable costs, likewise called variable expenses, will be costs that can change contingent upon your utilization of items or administrations; they are to some degree eccentric. For instance, expanded utilization of your auto delivers a relating increment in your variable costs for fuel and auto support. On the off chance that you have visitors remaining over for a broadened time, your variable cost for water may increment.

Answer 2

The flexible nature of variable cost and the mandatory requirement of fixed cost make it favorable for planning the variable cost after the fixed cost.

Further Explanation:

Variable expenses: Variable expenses are the expenses which vary with the output level. Variable expenses are directly related to the production, so they change with the change in the output.

Fixed expenses: Fixed expenses do not change with the change in the output level. They remain constant at all level of output.

Planning variable expenses after fixed expenses:

Variable cost should be planned after the fixed cost because of the following reasons:

• The fixed expense like rent and salaries are inevitable. So, the management cannot reduce them by planning. So, variable expenses are planned after fixed expenses.
• The variable expenses are flexible in nature. They can be changed or decreased by planning, but fixed expenses cannot be changed by planning.
• The budget for fixed expenses remains the same for several years. So, planning is not required in case of fixed cost. The budget for variable cost changes as per the business need so it should be planned after planning the fixed expense.

Learn more:

Learn more about the total cost

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Learn more about the variable cost

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Learn more about the good production

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Answer details:

Grade: Senior School

Subject: Cost Accounting

Chapter: Production cost

Keywords: Cost, fixed cost, most likely the, the variable cost, total cost, expenses, fixed expenses, variable expenses, total expenses, reason, should be planned, after, cost accounting, production cost, total production cost.