ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Variable expenses are those that change each time period. These include the cost of utility bills, food, clothing, entertainment, and education. Fixed expenses are those that are the same dollar amount each time period. They generally include mortgage, rent, and car payments.

Detailed explanation-2: -However, the cost of electricity is a variable cost since electricity usage increases with the number of products that are produced or manufactured. In short, if the total cost associated with the cost object changes when the production amount changes, it’s likely a variable cost.

Detailed explanation-3: -Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.