Question

Ben and his housemates signed a lease for an apartment for 12 months for $563 per month of which Ben agreed to pay $215 per month. Which of the following statements best gives the reasons that Ben’s rent payment is an essential (fixed) expense?
a. It cannot be eliminated in a later budget, in order to save money.
b. Living expenses have a higher priority than any other type of expense.
c. The spender controls the amount of the rent by choice of apartment.
d. It is by contract the same amount every month.

Answer 1

The answer would be D, but only for twelve months.

Answer 2

Answer:

d. It is by contract the same amount every month.

Step-by-step explanation:

A fixed expense is one in which you assume a monthly expense, such as rent. Normally, fixed expenses are forecast by contract, as explained by the correct alternative (D). Other examples of fixed expenses are the water and energy bills, which you use every month and must pay. Expenses that are not fixed are called variable expenses, such as buying clothes, where you choose whether or not to spend the money.