Description: Fixed costs are those expenses that a company incurs regardless of its level of production or sales. These costs do not vary with the quantity of goods or services produced, meaning they remain constant over a given period. Common examples of fixed costs include rent for facilities, salaries of permanent employees, insurance, and depreciation of assets. The main characteristic of fixed costs is that, in the short term, they are not affected by changes in production, allowing companies to plan and budget more effectively. However, in the long term, fixed costs can become a burden if production is insufficient to cover them. Proper management of fixed costs is crucial for the financial sustainability of a company, as a high level of fixed costs relative to income can lead to liquidity problems. Therefore, understanding and optimizing these costs is essential for improving profitability and operational efficiency within an organization.
