Why is Depreciation a Fixed Cost?

DannyT90

Can anyone explain why a depreciation of say a vehicle is a fixed cost?

I'm on unit 3 of level 2 Elements of Costing and even though i haven't learnt about depreciation yet, I'm keen to know the answer to this question.

Adele69

It's not going to vary according to different output under Absorption or Marginal Costing, unlike say using more or less Materials or Labour. As an asset, if you drive 100 miles or 100000 miles in the year it will still be depreciated by whatever depreciation method and incur the same costs on the Asset Register at the end of the period whatever level of Sales and Production. Might be worth more if used less than expected, so have greater residual value at the end of useful life.

Bertie

Depreciation is fixed also in the sense that regardless of profit or loss the expense will still occur.

Straight-line depreciation is fixed.
Reducing balance is fixed by nature yet the value of the expense will change from one period to another, so 'could' appear to be variable but isn't.