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.

 

[Emly]

A fixed cost is a business expense that remains constant regardless of the level of goods or services produced.

 

[Lucas]

A fixed cost is a business expense that remains constant regardless of the level of production or sales, such as rent or salaries.

 

[Sophie]

fixed cost refers to a business expense which remains constant regardless of the level of production or sales. They are rent, salaries and insurance. Fixed costs are not changeable with time as they assist companies in budget planning and determining profitability without consideration of output.

 

[Lucky]

A fixed cost is a business expense that does not change with production or sales volume. Common examples include rent, salaries, insurance, and property taxes. These costs remain constant regardless of business activity. Fixed costs help businesses plan budgets more accurately, but managing them effectively is crucial to maintaining profitability and long-term financial stability.