Is a rent of the factory building a variable or fixed cost

1 answer

The rent of a factory building is typically considered a fixed cost. Fixed costs are expenses that do not change with the level of production or output within a certain range. Rent remains constant regardless of how much or how little the factory produces.

However, it's important to note that if the lease agreement includes terms that allow for fluctuations in rent based on usage or other variables, it could have characteristics of a variable cost. But in most standard leasing situations, factory rent is classified as a fixed cost.