Which term describes expenses that remain the same regardless of production volume?

The term that describes expenses that remain the same regardless of production volume is fixed costs. Fixed costs are those expenditures that do not change with the level of goods or services produced by a business. This means that whether a company produces a large number of units or none at all, the costs like rent, salaries of permanent staff, and insurance will remain constant.

Understanding fixed costs is crucial for businesses as they help in budgeting and forecasting profitability. By differentiating fixed costs from variable costs, which increase with production volume, businesses can make informed decisions about pricing, production levels, and overall financial strategy.

Other terms mentioned, such as variable costs and overhead costs, represent different expense structures. Variable costs fluctuate based on the level of production, and overhead costs typically encompass both fixed and variable costs associated with running a business. Sunk costs refer to money that has already been spent and cannot be recovered, making them unrelated to the discussion of fixed or variable cost categories.