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Types of Expenses
A business expenditure is any fixed or variable cost that a company pays to conduct its operations. Fixed costs remain the same regardless of fluctuations in the business such as sales increases or declines. Facility leases, licensing fees and liability insurance are examples of fixed costs, which may fluctuate over time but not as a result of business behavior. Variable costs, on the other hand, are influenced by the company’s performance. For example, increased sales may mean more product output that requires additional expenditure for materials, warehousing and logistics. Expenses tied to payroll, marketing and technology are generally fixed but can be variable when business volume significantly changes in either direction.
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