Fixed costs remain constant regardless of output or sales volume

Steps:

• Define fixed costs as expenses that do not change with business activity levels, like rent or subscriptions.
• Review each option to classify if the cost varies with production, sales, or usage.
• Eliminate variable costs that fluctuate based on activity.
• Identify the option that stays constant over time.

Why D is correct:

• Telephone rental is a fixed cost per accounting definitions, as it involves a regular, unchanging payment for service regardless of usage volume or business output.

Why the others are wrong:

• A. Bank overdraft interest varies with the amount borrowed and usage, making it variable.
• B. Piece labour cost depends on units produced, so it is variable.
• C. Sales commission fluctuates with sales volume, classifying it as variable.

Final answer: D