Which of these would not be regarded as a variable cost for a service station?Group of answer choicesSalary of manager.Confectionery sold in the shop.Petrol and oil.Parts used in the workshop.
Question
Which of these would not be regarded as a variable cost for a service station?Group of answer choicesSalary of manager.Confectionery sold in the shop.Petrol and oil.Parts used in the workshop.
Solution
The salary of the manager would not be regarded as a variable cost for a service station. This is because a manager's salary is typically a fixed cost, meaning it does not change with the level of output or sales. It must be paid regardless of how much or how little the service station earns.
On the other hand, the cost of confectionery sold in the shop, petrol and oil, and parts used in the workshop are all variable costs. These costs change in direct proportion to the level of sales or production. For example, if the service station sells more petrol, it will need to buy more petrol, increasing the cost. Similarly, if it sells more confectionery or uses more parts in the workshop, these costs will also increase.
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