variable expenses definition

Variable expenses are those costs that adjust with the level of business activity. On the profit and loss statement these are typically listed as cost of goods sold (COGS) although some sales, general and administrative (SG&A) expenses may be variable, such as sales commissions. Common examples include:

- Electricity or fuel to run production equipment
- Payroll expense used in production
- Raw materials
- Supplies consumed in a process
- Shipping and freight

Most expenses have a fixed component that does not change readily with demand and another component that does, such as payroll and some leases.

Search again for fixed expenses.