Saturday, January 07, 2012
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Senior Member
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Join Date: Feb 2010
Location: Karachi
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Quote:
Originally Posted by xaara~hussain
hmm is it about the expense itself or its value? I mean the expense is fixed but not value.
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its for both...when you acquire some premises on rent there have always been fixed rent for certain period like in house rent case the agreement is for 11 months and after 11 months the rent will be revised as per agreed rate..and in accounting when you are considering rent you will take in to account the value of rents..you always made entry in numeric terms..but in nature Rent will be termed as Fixed expense with what ever value you paid...
I think you have been taking fixed and Variable expenses with wrong perception..in real
Fixed Expenses are those which you will have to bear whether you do any production or not. It does not mean that value which you pay remain Fixed. e.g if you have acquired some building on rent you will have to pay rent whether you use it or not.
On the contrary, Variable expenses are those expenses which directly related to your production means if you do any production these expenses are high and if you do not produce these expenses are either low or none.
e.g. your material Cost or Labour Cost, If you are going to do any production these costs will incur or else not.
I hope it clears your concept and if not then feel free to ask. 
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Regards,
~ Riz ~
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