Cleaning for the factory and warehouse will be a manufacturing overhead expense, whereas cleaning for the office building will be a period expense.
How expenses are categorized?
- Financial expenses can be divided into three categories: Fixed, Variable, and Periodic. For example, office rent or employee vehicle lease payments are examples of fixed expenses that don't alter for a long time.
- Monthly variations can be found in variable costs. Utilities, food, and entertainment are a few examples.
- Periodic expenses include things like auto maintenance and last-minute trips that arise infrequently and are difficult to prepare for.
- Small business owners in particular should pay closer attention to variable and periodic expenses because there might be significant variations from month to month.
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