Fill in the blanks. An example of a fixed cost is ________ .
Question
Fill in the blanks.
An example of a fixed cost is ________ .
Solution
Understanding Fixed Costs
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Definition: Fixed costs are expenses that do not change with the level of output or sales. They remain constant regardless of a business's production or sales activities.
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Common Examples: These costs can include:
- Rent or lease payments for office or factory space
- Salaries of permanent employees
- Insurance premiums
- Depreciation of assets
- Property taxes
Example of a Fixed Cost
Based on the definition and common examples, an example of a fixed cost is rent.
Rent is a regular payment made for using a space or property, which remains constant over time, regardless of how much product a business produces or sells.
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