Fixed Costs

Fixed costs are expenses that do not change regardless of the level of production or activity. In the context of Cost Benefit Analysis, they remain constant whether a business produces one product or a thousand. Examples include rent, salaries, and insurance. Understanding fixed costs is essential as they impact overall profitability; if a project does not generate enough revenue to cover these expenses, it may lead to losses. Evaluating fixed costs helps determine whether an investment or project is financially viable in the long run.