What is a Fixed Cost?

[deepak]

I’m trying to understand business expenses and came across the term “Fixed Cost.” From what I gather, it refers to costs that don’t change with production levels, but I’m not entirely sure. Can someone explain what counts as a fixed cost, maybe with some examples? Also, how does it differ from variable costs?

 

[robertwilliam]

A fixed cost is any kind of expense of a business that stays fixed or does not vary with the level of goods produced or services being sold. Examples include renting out the property for the business, paying salaries to permanent employees, insurance premiums, property taxes, and interests on loans.

 

[jainnorton]

Fixed Cost refers to an expense incurred by a business that remains the same in case of an increase or decrease in the quantity of goods or services manufactured (e.g., rent, insurance or a payroll of a certain employee).

 

[nikhilrajoria]

A fixed cost is an expense of the business that remains constant, no matter the production, such as rent, salaries, or insurance.