Which of the following would most likely be considered a fixed cost?

• A. Salaries
• B. Maintenance costs that vary with use
• C. Machinery depreciation
• D. Fuel

Answer: (C)

Fixed costs stay the same regardless of how much you produce in the short run. They are amounts that don’t flex with activity level, often tied to contracts, leases, or the aging of assets.

Machinery depreciation fits this idea because it is allocated over the asset’s useful life and recorded as a steady expense each period, no matter how many hours the machine is used. It reflects the wearing of the equipment over time, not the immediate amount of usage in a given period, so it remains constant within a period.

Maintenance costs that vary with use depend on how much you actually operate the machine—the more hours you run it, the more maintenance is typically needed. Fuel is directly tied to usage as well, so both are variable costs. Salaries can be fixed if they are unchanging, but they can also vary with workload or overtime; depreciation is the clearest example of a cost that behaves as fixed in the short term.

So, machinery depreciation is the best example of a fixed cost.