Expenses that change from month to month are called

• A. Variable Expenses
• B. Fixed Expenses
• C. Sunk Costs
• D. Depreciation

Answer: (A)

Variable expenses are costs that change with your level of activity. As you produce more or sell more, these costs rise; when activity slows, they drop. Think of items like raw materials, direct labor tied to production, utilities based on use, or sales commissions—the more you do, the higher they go. In budgeting and financial analysis, separating variable costs from fixed costs helps you predict how expenses will respond to changes in sales or output. The question points to costs that fluctuate month to month, which is exactly what variable expenses describe.

Fixed expenses, in contrast, stay same regardless of activity (like rent or certain salaries). Sunk costs are money already spent and not recoverable, and depreciation is an accounting allocation of an asset’s cost over time, not a monthly cash cost pattern.