What is a characteristic of fixed costs?

Fixed costs are defined as expenses that do not change with the number of goods or services produced within a certain range of activity. This characteristic means that even if a business increases or decreases its production levels, the total fixed costs remain the same. Common examples of fixed costs include rent, salaries of permanent staff, and insurance. These costs are incurred regardless of the operational volume, allowing for easier budgeting and financial planning, as they provide a level of predictability in a business’s financial commitments.

The other options do not accurately capture the nature of fixed costs. Fluctuating costs are indicative of variable costs, which change based on production levels. The notion that fixed costs are always higher than variable costs is misleading, as the relative size of each type can vary significantly by business and industry. Lastly, while increasing sales can improve a company's overall financial health, it does not inherently reduce fixed costs, as these costs are unrelated to sales volume.