Which cost in a palay buy-and-sell station could be classified as a fixed operational cost regardless of the volume of sales?

Which cost in a palay buy-and-sell station could be classified as a fixed operational cost regardless of the volume of sales?

• A. Salaries
• B. Cost of purchasing palay
• C. Transportation expenses
• D. Utilities

Answer: (A)

Salaries represent a fixed operational cost in a palay buy-and-sell station because they remain constant regardless of the fluctuations in sales volume. Even if the station sells more or less palay in a given period, the salary expenses for employees, such as managers and permanent staff, remain unchanged. This characteristic makes salaries a reliable fixed cost, which is crucial for budgeting and financial planning within the business. Other options, while they may have associated costs, typically vary with the level of sales. The cost of purchasing palay is directly linked to the quantity bought for resale; thus, it varies with sales volume. Transportation expenses can fluctuate based on the amount of product being moved and the distance, making them variable costs. Utilities, while they may have baseline charges, can also increase with higher operational levels (e.g., more electrical consumption during busier seasons), which can lead to them being viewed as more variable than salaries. Hence, salaries distinctly qualify as the fixed operational cost in this context.

Salaries represent a fixed operational cost in a palay buy-and-sell station because they remain constant regardless of the fluctuations in sales volume. Even if the station sells more or less palay in a given period, the salary expenses for employees, such as managers and permanent staff, remain unchanged. This characteristic makes salaries a reliable fixed cost, which is crucial for budgeting and financial planning within the business.

Other options, while they may have associated costs, typically vary with the level of sales. The cost of purchasing palay is directly linked to the quantity bought for resale; thus, it varies with sales volume. Transportation expenses can fluctuate based on the amount of product being moved and the distance, making them variable costs. Utilities, while they may have baseline charges, can also increase with higher operational levels (e.g., more electrical consumption during busier seasons), which can lead to them being viewed as more variable than salaries. Hence, salaries distinctly qualify as the fixed operational cost in this context.