Question

Rent, property taxes, and insurance are all independent of hotel occupancy rates; they vary only with the passage of time. For this reason, these expenses are called:___________.

Answer 1

Rent, property taxes, and insurance are all examples of fixed costs in a business as they are not influenced by production levels or sales volume.

Step-by-step explanation:

Rent, property taxes, and insurance are expenses that do not vary with a company's level of production or sales. These costs are known as fixed costs because they remain constant irrespective of the hotel's occupancy rates. Property taxes, for instance, are imposed on assets and a local assessor typically determines the value of the property for tax purposes. Similarly, once a lease for a property is signed, the rent is consistent until the lease expires. Fixed costs can encompass a variety of expenses, such as machinery or equipment costs, research and development, and advertising to establish a brand.