Categories of Costs One way to categorize costs is as variable or fixed. A variable cost is one that can be changed. For example, fertilizer is a variable cost at the start of the planting season because it has not yet been applied and the manager still can alter how much will be used that year, and thus how much will be spent on for that input. A fixed cost is an expense that cannot be changed. The interest that will accrue on a long-term land debt cannot be varied, nor can the depreciation that will occur to equipment.
Property tax is another example of a fixed cost.
A second way to categorize costs is whether the expense is cash or non-cash, as described in a previous section. A cash cost requires a cash payment such as paying the supplier for this year's seed or feed. Another category of costs is explicit and implicit. An explicit cost is one that needs to be paid to another person. Again, paying for seed or feed would be explicit costs.