Final answer:
The example of a fixed cost among the options provided is a supervision cost that is unchanged by the number of hours worked or the amount of output produced. Fixed costs do not vary with production volume, and the supervision cost fits this definition.
Step-by-step explanation:
To identify which option is an example of a fixed cost, it is important to understand that fixed costs are defined by their nature to remain constant, regardless of production levels. Let's review the options provided:
- A utility cost that varies directly with increases and decreases in production levels is a variable cost, not fixed.
- A marketing cost that remains unchanged over a certain activity level but increases once that level is exceeded shows characteristics of a step cost, which can be fixed within a certain range but then changing once the activity range is exceeded, it is not purely fixed.
- A supervision cost that is unchanged by the number of hours worked or the amount of output produced is a classic example of a fixed cost because it does not vary with the level of production or the number of hours.
- A material cost that varies inversely with increases and decreases in production levels is also a variable cost, as it fluctuates with production volume.
Therefore, the correct answer is c. A supervision cost that is unchanged by the number of hours worked or the amount of output produced. This cost remains steady no matter what the production volume is, making it a fixed cost.