Fixed costs remain constant despite output changes

Steps:

• Classify costs as fixed or variable based on output dependency.
• Variable costs scale with production volume, reducing if actual output is lower.
• Fixed costs, like rent or depreciation, stay unchanged regardless of output.
• Identify options 2 and 4 as fixed costs unaffected by the shortfall.

Why C is correct:

• Fixed costs are defined as expenses that do not vary with output levels, per cost accounting principles, so they match forecasts even with lower production.

Why the others are wrong:

• A includes variable cost (1), which decreases with lower output.
• B pairs fixed (2) with variable (3), so not both unchanged.
• D combines two variables or one variable (3), both affected by output drop.

Final answer: C