Which of the following best describes fixed costs?

Fixed costs are best described as expenses that do not change with production or sales activity. This means that regardless of how much product a company produces or sells, these costs remain constant over a certain period. Typical examples of fixed costs include rent, salaries of permanent staff, and insurance, which must be paid regardless of the level of business activity. Understanding fixed costs is crucial for small business finance management as they impact overall profitability and financial planning.

The other options illustrate concepts related to variable or sales-related costs, which fluctuate based on production levels or sales performance. However, fixed costs remain unchanged in the short term, making them a fundamental aspect of a business's financial structure. This distinction is vital for budgeting and forecasting, allowing businesses to strategize effectively based on their financial obligations.