Which of the following is characteristic of fixed costs?

Fixed costs are expenses that do not change with the level of production or business activity within a relevant range. This characteristic means that regardless of how much a company produces or sells, fixed costs remain constant. Common examples of fixed costs include rent, salaries, and insurance. These costs are incurred even when production is zero, making them critical for businesses to account for in their financial planning.

Understanding fixed costs is essential for budgeting and financial forecasting because they can significantly affect a company's overall profitability. In contrast to variable costs, which fluctuate with production volumes, fixed costs provide a stable financial baseline that helps businesses manage resources and make strategic decisions.