Which term describes the costs that do not change with the level of goods or services produced?

The term that describes costs which remain constant regardless of the level of goods or services produced is known as fixed costs. These costs are incurred over a specified period and do not fluctuate with the volume of production or sales. Common examples of fixed costs include rent, salaries, and insurance, which remain the same regardless of how much a company produces.

In contrast, variable costs change in direct proportion to the level of production. For instance, materials and labor costs can increase as production increases. Direct costs are directly tied to the production of specific goods or services, while indifferent costs, a less commonly used term, does not apply in this context and is not standard accounting terminology. Therefore, understanding fixed costs is essential for budgeting and financial planning, as they represent a predictable expense for a business.