5 Mr . Coltrane operates a norist Some of his monthly operating expenses are shown below. Monthly Expenses Building Rent. \( \qquad \) \( \$ 1,750 \) Utilities.. \( \qquad \) \( \$ 425 \) to \( \$ 495 \) Labor costs. \( \qquad \) \( \$ 850 \) to \( \$ 1,350 \) Vehicle costs. \( \qquad \) \( \$ 415 \) to \( \$ 625 \) Which expense appears to be a fixed expense? A Building rent C Labor costs B Utilities D Vehicle costs
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A Building rent Building rent is classified as a fixed expense because it remains constant each month, regardless of the business's operation levels. In Mr. Coltrane's case, he has to pay the same amount of $1,750 every month, making it a reliable figure in his budgeting and financial planning. On the other hand, expenses like utilities, labor costs, and vehicle costs can fluctuate each month based on usage, employee hours, or mileage, which means they are considered variable expenses. This distinction helps business owners like Mr. Coltrane manage their finances effectively by identifying which costs are predictable and which may need closer monitoring.
