What characterizes fixed costs?
Understand the Problem
The question is asking to identify the defining feature of fixed costs in relation to production levels. It is looking for the correct statement that accurately reflects how fixed costs operate in a business context.
Answer
Fixed costs are expenses that do not change with production levels.
Fixed costs are expenses that do not change with production levels or business activity. Examples include rent, salaries, and insurance.
Answer for screen readers
Fixed costs are expenses that do not change with production levels or business activity. Examples include rent, salaries, and insurance.
More Information
Fixed costs are essential for budgeting and financial planning as they are predictable and do not fluctuate with activity levels, unlike variable costs.
Sources
- What are fixed costs? | BDC.ca - bdc.ca
- What Is Fixed Cost? - LegalZoom - legalzoom.com
- What is a Fixed Cost? | Definition - Xero - xero.com
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