Certiport Business Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

Monthly rent for a retail space is considered a fixed cost because it remains constant regardless of the level of sales or production. Fixed costs are expenses that do not change with the amount of goods or services produced; they are typically incurred on a regular basis, such as monthly or annually. Rent is a classic example of a fixed cost because it must be paid regardless of the business's performance, making it predictable and consistent.

In contrast, other expenses listed, such as utilities based on usage, fluctuate depending on consumption levels, thus they are variable costs. Similarly, raw materials for production depend on production volume; as more products are made, more raw materials will be needed, categorizing this expense as variable as well. Sales commissions are also variable costs as they are directly tied to sales performance; if sales increase, commissions will increase accordingly. Thus, only the monthly rent stands out as a fixed expense that remains stable over time.