# Classification of Costs in the Transport Industry
In the transport industry, costs are classified into three categories based on their behaviour with respect to the level of activity (kms run, trips made etc.).
## Variable Costs
These vary directly with the kms run or trips made.
- Diesel / Fuel
- Toll Tax
- Lubricant
- Wages to driver (if paid per trip/km)
- Passenger tax
- Depreciation (if calculated on usage basis i.e. on km basis)
## Semi-Variable Costs
These have both a fixed and variable component.
- Tyres
- Tools
- Repairs & Maintenance
## Fixed Costs
These remain constant regardless of kms run.
- Salary of driver (if paid fixed monthly)
- Insurance
- Rent
- Office expenses
- Taxes
- Licence Fees
- Administration fees
- Garage Fees
- Electricity
- Loading / unloading expenses
- Gas
- Technical Fee
## Important Note on Depreciation
Depreciation can be either fixed or variable:
- Fixed — if calculated on time basis (e.g., straight line method per year)
- Variable — if calculated on usage basis (e.g., per km basis)
Read the question carefully to determine the basis.