What type of expenses remain unchanged regardless of business activity within a certain period?

Fixed costs are expenses that do not change in total regardless of the level of production or business activity within a certain period. These costs remain stable despite increases or decreases in sales volume, meaning they are incurred even when business operations are minimal. Common examples of fixed costs include rent, salaries of permanent staff, and insurance premiums.

This characteristic of fixed costs is essential for businesses in budgeting and financial planning because it allows them to predict necessary expenditures over different levels of activity. Understanding fixed costs helps managers analyze the breakeven point and set prices accordingly, ensuring that they can cover their expenses regardless of sales fluctuations.

In contrast, variable costs fluctuate with the level of production or sales volume, which makes them directly tied to business activity. Direct costs can be variable or fixed and are specifically linked to a product or service, while indirect costs include expenses that cannot be directly traced to a product and may also change with activity levels.