Transportation Operations LINCS Practice Exam

Which of the following costs can fluctuate based on mileage traveled?

1. Fixed costs

2. Variable costs

3. Administrative costs

4. Overhead costs

The correct answer is: Variable costs

The correct answer is variable costs. This is because variable costs are directly tied to the level of activity or usage, such as mileage traveled in transportation operations. As distances increase or decrease, associated costs such as fuel, maintenance, and driver wages can vary significantly. For instance, a longer trip will generally incur higher fuel costs and may necessitate more maintenance due to increased wear and tear on the vehicle. Fixed costs, on the other hand, remain constant regardless of the distance traveled. These include costs such as insurance, lease payments, and salaries for permanent staff, which do not change with the number of miles driven. Administrative costs involve expenses related to the overhead management and coordination of transportation operations and are typically not directly influenced by mileage. Overhead costs encompass all operational expenses that are not directly tied to transporting goods or services. These can include both fixed and variable components but do not specifically fluctuate based solely on mileage traveled. Thus, variable costs is the most accurate answer as they adapt based on the number of miles driven.