Costs that do not change from month to month are called

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

Answer: (A)

Fixed costs are costs that stay the same month to month, no matter how much or how little the business produces or sells within the relevant range. This means their total amount doesn’t change with activity level, making budgeting predictable. Examples include rent, permanent salaries, insurance, and depreciation. In contrast, variable costs change with activity, such as materials or sales commissions. Semi-variable costs have both fixed and variable parts, so part remains constant while another part varies with usage. Direct costs are tied to a specific product or project and can be either fixed or variable, but the defining feature here is the unchanging total from month to month, which characterizes fixed costs.