Fixed costs are expenses that are predictable and do not fluctuate according to the goods produced or sold by the company. These are costs the firm needs to pay independent of the business activities. These include staff salaries, taxes, rent, insurance, licenses, depreciation of assets, etc.
The costs of a company consist of both fixed and variable costs. Variable costs are those that vary according to the fluctuations in the production of goods. Both fixed costs and variable costs are considered while calculating costs per unit. Fixed costs are recorded in the income statements, balance sheets, and cash flow statements.