ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -For example, entertainment and clothing are flexible expenses. Even necessary expenses, such as groceries, can be considered flexible because the consumer adjusts the amount spent. A company often makes use of flexible expenses to scale costs based on business needs.

Detailed explanation-2: -A few examples of flexible expenses include what you pay for monthly groceries, clothing, and transportation, as the total cost of all of these things will most likely vary.

Detailed explanation-3: -Rent, room and board if you live on campus, and car payments are fixed expenses; flexible – these amounts change from month to month. Utility bills, food (including that latte you grab on the way to class), and entertainment are flexible expenses.

Detailed explanation-4: -Categories of Expenses in a Flexible Budget Rent, lease payments, insurance, interest payments, website fees, certain salaries.

Detailed explanation-5: -Example of a Flexible Budget ABC Company has a budget of $10 million in revenues and a $4 million cost of goods sold. Of the $4 million in budgeted cost of goods sold, $1 million is fixed, and $3 million varies directly with revenue. Thus, the variable portion of the cost of goods sold is 30% of revenues.