Which one of the following budget items would probably be considered a fixed expense?
A. Entertainment
B. Savings
C. Clothing
D. Insurance premiums
i think c
I disagree. A person doesn't have to buy clothing on a regular basis.
It's d?
To determine which one of the budget items listed would likely be considered a fixed expense, we need to understand the difference between fixed and variable expenses.
Fixed expenses are regular and predictable costs that remain relatively stable from month to month. They are usually necessary and recurring expenses that you have little control over, such as rent or mortgage payments, car loan payments, insurance premiums, and utilities. Variable expenses, on the other hand, are costs that can fluctuate and are more easily controlled or adjusted, such as entertainment, dining out, or clothing.
Looking at the options you provided, we can eliminate options A, B, and C (entertainment, savings, and clothing) as fixed expenses since they are more likely to fall under variable expenses. Entertainment and clothing expenses can vary greatly from month to month depending on personal choices and preferences, while savings is an optional allocation of funds that can be adjusted to meet financial goals.
Therefore, the most probable fixed expense from the options provided is option D, Insurance premiums. Insurance payments, like car insurance or health insurance, are typically regular and predictable costs that are necessary to maintain coverage and protection. These payments are usually required on a monthly or annual basis and tend to remain consistent over time, qualifying them as fixed expenses.