Fixed and Variable Rate Allowance - FAVR

You work for a company that delivers singing telegrams. You use your own car to make the deliveries. To reimburse you, the company provides you with a fixed and variable rate allowance.

The FAVR is a formula for compensating employees who use their own vehicles for business purposes. It reimburses them for variable costs (such as the gas necessary to drive around), as well as fixed expenses (i.e., the monthly car payment).