fixed expenses
Financial Dictionary — Cost & Management Accounting
Definition
Fixed expenses in operating a business are those expenses that remain the same regardless of the volume of production or sales, i.e. they do not fluctuate with the volume of sales. In contrast to variable expenses.
Use cases, Example & Why it matters
Use cases
- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.
Example
- Example: The costing team uses **fixed expenses** to allocate costs and analyze margins by product line.
Why it matters
- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.