Replies to post #26217 on Muscle Pharm Corp (fka MSLPQ)

[Odessa99]

I didn't want to make my previous post too complicated, but in reality, all fixed expenses are no longer fixed after some huge jump in volume. For example, if you own one McDonald's franchise, and you actually own the physical building, one 'fixed' expense would be annual property taxes. Whether you sell one hamburger or one thousand, that property tax remains fixed. But, at some huge volume, you would likely have to grow the size of the building capacity (to keep the angry hamburger-eating mob happy). If you improved the property by expanding the eat-in dining area, your 'fixed' property taxes will likely rise with the increased assessment value. So even though the property tax may grow after some large increase in hamburger sales volume, we still refer to it as a fixed expense because the amount does not vary directly with the sales unit volume. A great example of a variable expense would be a per-unit license fee on a garment. As always, simply my opinion.

I agree with your post only that fixed expenses go up with a growing company.

Yes the variable....say the amount of salaries in a months time will flux a good bit and continue to go up with company growth.

However, fixed expense can too with the growth of a company. Its just that the expense of that item or service remains the same but more of it may be needed with the growth of a company.

Lets say there is a calibration unit that cost $400,000 used on some of their products. Well, there might be a loan that is the same cost per month....yes fixed expense. However, with growth there are new fixed expenses...you might need three of those calibration units and now you have 3 loans at a fixed expense...

just sayin...

MSLP