Define variable and fixed costs and name three components of each.

Question

Quizplus · Accepted Answer

The Answer is A variable cost is a cost that fluctuates with sales and is expressed in terms of percentage of sales.Areas that are considered variable are hourly labor, linen cost, equipment repairs, building repairs, credit card expense, advertising, manager bonus, training cost, kitchen smallwares/ supplies, front of house smallwares/supplies, dish washer supplies, bath- room supplies, telephone calls, miscellaneous, postage expense, paper supplies, general and office supplies, computer supplies, china, silver- ware, glassware, menus/printing, and uniforms.
Fixed costs are known costs and usually remain fixed throughout the year.Fixed costs are expressed in dollar terms and will not fluctuate with an increase or decrease in sales volume.Fixed costs include rent or mortgage, property taxes, insurance costs, management payroll, con- tracted maintenance, loan payments, and utilities.(Utilities can be managed and controlled.However, utility costs will most likely remain within a certain range and therefore can be planned.)

Define Variable and Fixed Costs and Name Three Components of Each