With suitable example, write the meaning of fixed cost.

Fixed cost refers to those costs that remain constant in total amount regardless of the level of production or sales within a certain range. These costs are incurred even when there is no production activity. Fixed costs are essential for the operation of a business and must be paid irrespective of the business's output.

Example:

Suppose a company rents a factory building for Rs. 50,000 per month. This rent remains the same whether the company produces 100 units or 1,000 units of a product. Similarly, salaries of permanent employees, insurance premiums, and depreciation on machinery are also fixed costs.

Fixed costs are non-variable and are crucial for long-term planning and cost-volume-profit analysis. They help in determining the break-even point of a business.