![]() ![]() Office supplies: These are the consumable materials used in the daily operations of a business, such as pens, paper, and printer ink.Utilities: Electricity, water, and gas bills are examples of variable expenses.Salaries and wages: This expense includes payments to employees for their services rendered.Rent: Rent is a fixed expense that businesses incur for leasing space to conduct their operations. ![]() For instance, if the variable cost per unit is $2, and the company produces 10,000 units, the total variable expense would be $20,000 ($2 x 10,000). ![]() Variable expenses, on the other hand, are calculated by multiplying the variable cost per unit by the number of units produced or sold. For example, if a company’s total fixed expenses are $50,000, and it produces 10,000 units, the fixed cost per unit would be $5 ($50,000/10,000). Fixed expenses are calculated by dividing the total fixed expenses by the total number of units produced or sold. On the other hand, variable expenses vary in proportion to the level of business activity or the volume of goods or services produced.Ĭalculation of Expenses: The calculation of expenses depends on the type of expense, whether fixed or variable. Fixed expenses are those that remain constant irrespective of the level of business activity or the volume of goods or services produced. Expenses can be classified as either fixed or variable expenses. In this article, we will discuss what expenses are, how they are calculated, and provide examples and a quiz to test your understanding.īody Paragraphs: Definition of Expense: An expense is a cost incurred in acquiring goods or services that are essential for business or personal use. Expenses can be classified as either fixed or variable, and it is essential to keep track of them to maintain financial stability. In simple terms, expense refers to the cost incurred in acquiring goods or services. Whether we are running a business or managing our household expenses, understanding the concept of expense and its calculations is crucial. In our daily life, we come across the term “expense” quite frequently. ![]()
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