Which costs are consistent throughout the budget period?

Which costs are consistent throughout the budget period?

• A. Indirect costs
• B. Variable costs
• C. Direct costs
• D. Fixed costs

Answer: (D)

Fixed costs stay the same throughout the budget period, no matter how much you produce or how many services you deliver. This predictability comes from items like rent, lease payments, and salaried positions that don’t vary with activity. Because they don’t change with volume, they provide a steady baseline for budgeting. Variable costs, by contrast, rise or fall with activity levels, so they aren’t consistent. Direct costs relate to specific projects or outputs and can be either fixed or variable, while indirect costs are overhead that can also be fixed or variable depending on the situation. The defining idea here is stability across the budget period, which is why fixed costs are the correct choice.

Fixed costs stay the same throughout the budget period, no matter how much you produce or how many services you deliver. This predictability comes from items like rent, lease payments, and salaried positions that don’t vary with activity. Because they don’t change with volume, they provide a steady baseline for budgeting. Variable costs, by contrast, rise or fall with activity levels, so they aren’t consistent. Direct costs relate to specific projects or outputs and can be either fixed or variable, while indirect costs are overhead that can also be fixed or variable depending on the situation. The defining idea here is stability across the budget period, which is why fixed costs are the correct choice.