Question

Scenario:

Ahmad needs to create a budget for his first year at college. He will need to include the following expense categories: his health insurance, the electricity bill, the water bill, his rent, his food expenses, and discretionary spending.

Which of Ahmad's expenses will most likely be ranked as variable expenses? Check all that apply.

rent
discretionary spending
groceries
health insurance
electricity bill
water bill

Answer 1

Variable expenses: discretionary spending, groceries, electricity bill, water bill.

Reason: Variable expenses change month-to-month with usage or choices (how much Ahmad eats, how much he spends on non-essentials, and utility usage). Rent and health insurance are typically fixed monthly costs.