The examples of
fixed costs remain unchanged during any level of business operation. The portfolio of fixed costs includes rental payments, property tax obligations, wages paid to standing staff members and premiums for insurance coverage as well as depreciation costs from equipment. Production levels have no impact on these necessary expenses which make them essential for financial management. A company that maintains an office rental agreement has to fulfill their monthly payment obligations regardless of their business performance. Strategic control of fixed operational costs enables organizations to stay profitable and protected from financial burdens which occur during economic recessions and low revenue times.
