Fixed and Variable
Expenses
Objectives
Understand the difference between fixed and variable expenses
Create an expenses equation based on fixed and variable expenses
Vocabulary
Variable expenses: expenses that change depending on how many are produced
Ex. raw materials, labor, production costs
Fixed expenses: expenses that do not change.
Ex. Rent, computer cost, equipment
Expense Equation
E= V+F
Revenue: Total monies brought into the business
Revenue equation
R=pq
p=price
Profit: dollars after expenses are paid
Breakeven point: when expenses equals revenue
q=amount
Ex. 1
ON YOUR OWN #1
ON YOUR OWN #2
ON YOUR OWN #3