Here are a number of examples of variable costs, all in a production setting:
- 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.
- Credit card fees.
- Freight out.
In this regard, what is an example of a fixed expense?
A fixed expense is an expense that will be the same total amount regardless of changes in the amount of sales, production, or some other activity. For example, a retailer's monthly rent expense of $2,000 is a fixed expense because it will be a total of $2,000 whether the monthly sales are $15,000 or $30,000.
What are considered fixed expenses?
Fixed expenses or costs are those that do not fluctuate with changes in production level or sales volume. They include such expenses as rent, insurance, dues and subscriptions, equipment leases, payments on loans, depreciation, management salaries, and advertising.
What are some examples of fixed and variable costs?
Fixed costs often include rent, buildings, machinery, etc. Variable costs are costs that vary with output. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc.