Which category describes expenses that fluctuate each month, such as food, utilities, and entertainment?

• A. Fixed
• B. Discretionary
• C. Variable
• D. Irregular

Answer: (C)

This question tests how expenses change from month to month. Variable expenses are costs that don’t have a fixed amount and can rise or fall based on usage or circumstances—food costs change with meals and shopping, utilities depend on how much you use, and entertainment spending varies with what you do each month. Because the amount you spend in each category can differ from one month to the next, it fits best under variable budgeting, where estimates are often given as a range. Fixed expenses stay the same every month, like rent or a car payment. Discretionary expenses are optional spending, but the key point here is the fluctuation in amount, not whether the expense is optional. Irregular isn’t a standard category for routine monthly costs.