7. Cash flows from operations: What are variable costs and fixed costs? Variable costs are costs that vary directly with the number of units sold. Fixed costs are costs that do not vary directly with the number of units sold. What are some examples of each? Variable costs: Labor, materials, shipping costs and sales and marketing. -Fixed costs: Administrative costs, warehouse space, salaries. How are these costs estimated in forecasting operating expenses? 8. Cash flows from operations: When forecasting operating expenses, explain the difference between a fixed cost and a variable cost