Variable Expenses are those expenses that are directly linked to the volume of business that you conduct. A good example here is Sales Commission. If you do not sell any vehicles then commission will be zero. When a Salesperson sells a vehicle, only then does the Sales Commission become payable.
Typically, Variable Expenses are shown as a monetary value and in order for you to capture meaningful trend analysis you will need to express them as a percentage of departmental Turnover.
Example:
A) Variable Expenses = R133,778 B) Total Turnover = R7,432,165 C) Variable Expense % = 1.8% (A ÷ B X 100)
Discussion:
The term "Variable" does not mean that an expense varies by value, nor does it mean that it may change in some way. It simply means that this type of expense grows with the level of business that you conduct.
In order to gain full control over your Departmental Expenses you really need to understand the difference between Variable and Semi-fixed Expenses and have them properly separated on your financial reports.