Which of the following describes fixed costs?

Fixed costs are those expenses that do not change with the level of production or sales. This means that regardless of how much a company produces—whether it’s a high volume, low volume, or no production at all—fixed costs remain consistent. Examples of fixed costs include rent, salaries, and insurance; these items need to be paid regardless of the company's output.

Understanding the nature of fixed costs is essential for businesses as it helps in budgeting and financial planning. Since fixed costs do not fluctuate with production, they can be attributed to long-term financial commitments that a company incurs, allowing more accurate assessments of profitability and cost management.