Question

purchase and expense types
purchases can be categorized as either discretionary or non - discretionary. non - discretionary purchases cover needs, while discretionary purchases cover wants. expenses can be categorized as either fixed, meaning they do not change over time, or variable, meaning they do tend to change from one time period to another.
purpose
upon completing this project, you will understand the difference between discretionary and non - discretionary purchases and between fixed and variable expenses.
steps for completion

1. label the following purchases as discretionary (d) or non - discretionary (n).

a. ______ mortgage payments
b. ______ streaming service subscription
c. ______ birthday cake
d. ______ fresh vegetables

1. label the following expenses as fixed (f) or variable (v).

a. ______ utility bills
b. ______ rent
c. ______ groceries
d. ______ car payments

Explanation:

1. Discretionary/non - discretionary:

• Non - discretionary purchases are needs. Mortgage payments are for housing, a basic need, so they are non - discretionary. Streaming service subscriptions, birthday cakes are wants, so they are discretionary. Fresh vegetables are a need for nutrition, so they are non - discretionary.

1. Fixed/variable:

• Fixed expenses do not change over time. Rent and car payments are usually fixed amounts over a period. Utility bills vary based on usage, and groceries vary depending on consumption, so they are variable.

Answer:

1.
a. N
b. D
c. D
d. N
2.
a. V
b. F
c. V
d. F