An example of a fixed cost is?

Monthly rent is classified as a fixed cost because it remains constant regardless of the level of production or sales activity a business engages in. Fixed costs are expenses that do not change with the volume of goods or services produced within a certain range of activity. This means that regardless of whether a company sells a lot or only a few products, it still has to pay the same amount in rent each month.

In contrast, costs like the cost of goods sold, variable manufacturing expenses, and sales commissions fluctuate depending on sales volume and production levels. This demonstrates the fundamental nature of fixed costs to provide stability in a business's financial planning, aiding in budgeting and forecasting.