ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Definition. A fixed expense is a bill that must be paid on a regular basis and the cost of which doesn’t vary too much. Since fixed expenses don’t change, it’s easier to budget for these items. Your mortgage, loan payments, and property taxes are examples of fixed expenses.

Detailed explanation-2: -Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).

Detailed explanation-3: -Examples of Fixed Expenses Mortgage or rent payments. Loan payments, such as auto loans or student loans. Insurance premiums, such as for car insurance and homeowners insurance.

Detailed explanation-4: -Variable costs are expenses that change directly and proportionally to the changes in business activity level or volume. Even if the output is nil, fixed costs are incurred. Fixed costs are also known as overhead costs, period costs or supplementary costs.

Detailed explanation-5: -Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments.