What does variable expense refer to in budgeting?

Variable expenses refer to costs that can fluctuate in amount and can be adjusted or managed based on the circumstances or needs. This type of expense changes based on usage, consumption, and individual circumstances, making them different from fixed expenses which remain constant regardless of activity levels.

For example, spending on groceries, entertainment, or utilities can vary from month to month, providing flexibility to the budget. This flexibility allows individuals or organizations to control these expenses more effectively, as they can increase or decrease them depending on financial situations or priorities.

The other options define categories of expenses that are not adjustable or vary in a different context. Constant expenses remain unchanged over time and cannot be easily modified in a budget. Fixed costs, such as those associated with housing like rent or mortgage, do not change and are predictable. Mandatory tax payments are also non-negotiable and must be paid regardless of one's financial situation, thus lacking the adjustability characteristic of variable expenses.