Fixed costs are those expenses that don’t change no matter how much stuff you produce or how many services you provide. They’re like the monthly rent you pay for your apartment—whether you’re on vacation or staying in for the weekend, that rent stays the same. In the business world, fixed costs include things like rent for office space, salaries for permanent staff, or insurance premiums. For example, if you run a bakery, your rent and the salaries of your full-time employees are fixed costs. They don’t go up or down with the number of cakes you bake or sell. Fixed costs are crucial because they help businesses understand what their basic expenses will be, regardless of their production level. Even if you’re not making any sales, you still need to cover these costs, so they’re a key part of managing and budgeting for any business.
EconPlug
Copyright © 2024 EconPlug - All Rights Reserved.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.