Which of the following is an example of a variable expense?

Which of the following is an example of a variable expense?

• A. Monthly rent payment
• B. Utility bills that fluctuate based on usage
• C. Insurance premiums
• D. Loan payments

Answer: (B)

A variable expense is one that can change in amount from month to month, depending on personal usage and lifestyle choices. Utility bills serve as a perfect example of this, as their cost can vary based on factors like the amount of energy or water consumed. This fluctuation makes it a typical variable expense, as it is not a fixed amount that remains the same each month. In contrast, monthly rent payments and loan payments are fixed expenses. They are predetermined and typically do not change, providing a stable cost that households can rely on each month. Insurance premiums are also classified as fixed expenses because they usually remain consistent over a specified period, regardless of individual behavior or usage. In summary, the variability in monthly utility bills clearly distinguishes them as a variable expense.

A variable expense is one that can change in amount from month to month, depending on personal usage and lifestyle choices. Utility bills serve as a perfect example of this, as their cost can vary based on factors like the amount of energy or water consumed. This fluctuation makes it a typical variable expense, as it is not a fixed amount that remains the same each month.

In contrast, monthly rent payments and loan payments are fixed expenses. They are predetermined and typically do not change, providing a stable cost that households can rely on each month. Insurance premiums are also classified as fixed expenses because they usually remain consistent over a specified period, regardless of individual behavior or usage. In summary, the variability in monthly utility bills clearly distinguishes them as a variable expense.