What is a fixed cost?

 A fixed cost is a business expense that remains constant regardless of the level of goods or services produced. These costs do not fluctuate with production volume, making them predictable and easier to budget for. Examples include rent, salaries, insurance, and depreciation. Fixed costs are essential for a business's ongoing operations, even during slow periods. Unlike variable costs, which change based on output, fixed costs must be paid regardless of activity. Understanding fixed costs helps businesses set prices, forecast profits, and manage their finances effectively.