What is typically included in fixed costs?

Fixed costs are expenses that do not change with the level of production or sales. They remain constant over a certain period, regardless of the business's activity levels. Insurance and taxes are typical examples of fixed costs because they are regularly scheduled payments that the business must make regardless of how much it produces or sells. These costs are essential for the operation of the business and are incurred even when production is at a standstill.

In contrast, options such as direct labor expenses, materials needed for production, and sales commissions fluctuate based on the volume of goods produced or sold. Direct labor costs can vary depending on how many employees are needed and the number of hours they work, while materials costs change according to production levels. Sales commissions are similarly variable, as they depend on the sales made by the employees. Therefore, insurance and taxes are accurately categorized as fixed costs, while the other options represent variable costs that vary with production and sales activities.