Fixed costs (aka fixed expenses or overhead)

Fixed costs stay the same month to month. They aren’t affected by your production volume or sales volume.

You can think of them as the price of staying in business: Even if your company isn’t making any sale, you have to pay your fixed costs. For instance, no matter how many rubber ducks you sell, your bathtub accessories store still needs to pay rent. Fixed costs appear on your income statement and balance sheet, but they tend to stay the same month to month.

Variable costs (aka variable expenses)

Falling under the category of cost of goods sold (COGS), your total variable cost is the amount of money you spend to produce and sell your products or services. That includes labor costs (direct labor) and raw materials (direct materials).

Variable costs increase in tandem with sales volume and production volume. They’re also tied to revenue—since the more you sell, the more revenue you have coming in. So, if you sell tote bags, and your sales revenue doubles during the holidays, you’ll also see your variable costs—including the cost of wholesale tote bags—increase.

In your notes make two lists:

1. A list of personal and variable expense that you have.....let's say you have to pay rent and it costs $500/month, you have a car payment of $100/month and an insurance payment of $50/month, in addition to whatever your variable expenses are.

2. Do a little research to make sure you understand fixed and Variable expenses. Then create a list of FIXED and VARRIABLE expenses for a business like 133 in Courtenay.

3. If you or your business had to save money, what expenses would you cut first, list 3 expenses.