Costs that do not vary with the level of output are called?

Costs that do not vary with the level of output are called?

• A. Variable Costs
• B. Semi-variable Costs
• C. Overheads
• D. Fixed Costs

Answer: (D)

Costs that stay the same regardless of how much is produced are fixed costs. They don’t change with output in the short term, so whether you manufacture a lot or a little, these costs remain constant. Examples include rent for premises and the salaries of permanent staff. In contrast, variable costs change with production levels, such as raw materials or direct labour. Semi-variable costs have both fixed and variable elements, so part of them stays constant while another part varies with output. Overheads are indirect costs and can be either fixed or variable, but the question asks for a description that specifies no change with output, which points to fixed costs.

Costs that stay the same regardless of how much is produced are fixed costs. They don’t change with output in the short term, so whether you manufacture a lot or a little, these costs remain constant. Examples include rent for premises and the salaries of permanent staff. In contrast, variable costs change with production levels, such as raw materials or direct labour. Semi-variable costs have both fixed and variable elements, so part of them stays constant while another part varies with output. Overheads are indirect costs and can be either fixed or variable, but the question asks for a description that specifies no change with output, which points to fixed costs.