Fixed costs are expenses that do not change with the level of production or sales. These costs remain constant regardless of how much a business produces or sells. Common examples include rent, salaries, and insurance. Since they are predictable, businesses can plan their budgets more effectively. Understanding fixed costs is essential for financial management. They help businesses determine their break-even point, which is the level of sales needed to cover all costs. By knowing their fixed costs, companies can make informed decisions about pricing, production levels, and overall financial strategy.