Variable Expenses

Definition - What does Variable Expenses mean?

The expenses of a business can either be categorized as a fixed expense or a variable expense. A variable expense, specifically, is an expense that changes due to the amount of activity incurred by the business. A fixed expense is one that repeatedly remains the same each month or designated time period.

Justipedia explains Variable Expenses

For example, the rent payment of a business is generally going to be classified as a fixed expense because this amount will be the same every month. An electricity bill, on the other hand, is an example of a variable expense because this amount may vary based on the amount of air conditioning used or the length of time machinery is used each month. Inventory and supplies may also be considered variable expenses which may fluctuate based on sales.

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