In a fasst growing company, does an increase in sales necessarily
imply an increase in expenses?

Keek18 --

You might wish to see the comments on this version of the identical
question, as they discuss the issue:
http://answers.google.com/answers/threadview?id=529626

Best regards,

Omnivorous-GA

In almost all situations expenses increase as sales increase. 

For example even in a hotel business, where most of the costs are
fixed an increase in occupancy rates (more rroms filled each night)
would increase the electric bills and perhaps the maintenence, laundry
service, cleaning costs.

Theoritcally  sales could increase slightly with no additional costs
for example FOr Ebay one additional listing would not require more
storage costs or electrcity. Of course if there were 10,000,000 new
auctions per month perhaps another server would haveto be added.

And so the best answer is yes. 

To analyse the effect of how much expenses increase by an increase in
sales you can look at the cost structure of the firm. Costs are made
up of fixed costs and variable costs. Some buinsesses are mostly fixed
costs (hotels) and some are mostly variable costs (mail order -
furniture).

the % change in expenses is also called marginal cost (which is the
cost of one additional item).

There is generally a trade off as follows. a company with high fixed
costs can lower varible costs or tyhe company can have lower fixzed
costs and then have higher variable costs. For example: a store can
pay its salespeople salaries which is then a fixed costs or it can pay
its employees commision. If it pays salaries the costs has to be paid
even if no one walks in the store if it is commision it the expense
would depend on the level of sales

Thank you both~!