What term refers to costs that do not vary with the quantity of output produced?

The term that refers to costs that do not vary with the quantity of output produced is fixed costs. Fixed costs are expenses that remain constant regardless of the level of production or sales. This means that whether a business produces a large volume of goods or none at all, these costs will not change. Examples of fixed costs include rent, salaries of permanent staff, and insurance.

In contrast, variable costs fluctuate with production levels, meaning that they increase or decrease as the quantity of goods produced changes. Direct costs can be variable or fixed, depending on whether they are tied directly to production levels. Operational costs encompass both fixed and variable costs associated with running a business. Understanding the distinction between these types of costs is crucial for businesses to manage their finances effectively and to make informed decisions regarding pricing, budgeting, and financial planning.