Difference Between Fixed Expenses and Variable Expenses

The Nancy Byerly Show

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I am continuing our cost accounting (#costaccounting) series today by explaining the difference between fixed and variable expenses. Throughout the video, I will be using the following terms interchangeably and they are costs and expenses. (#VariableCosts.) Variable costs change based on the number of items produced or the number of services provided. If your production goes up 20% then your variable expenses (cost) goes up by 20%. If your production goes down by 30% then your variable costs will go down by the same percentage.

Your fixed expenses stay the same. They do not change no matter how many products or services are provided. They are fixed, hence the name fixed costs. #FixedCosts #FixedExpenses

Why do you need to know the difference between fixed expenses and variable expenses? Well, the more fixed cost a company has the more revenue the company needs to produce to break even.

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