When considering the operating costs of cars, which of the following is typically classified as a variable cost?

• A. Fuel expenses
• B. Annual vehicle registration fees
• C. Car insurance premiums
• D. Depreciation of the car's value

Answer: (A)

Verified step by step guidance

1. Understand the difference between fixed costs and variable costs in the context of operating a car. Fixed costs do not change with the level of usage, while variable costs vary depending on how much the car is used.
2. Identify each cost item: Annual vehicle registration fees, car insurance premiums, and depreciation are generally fixed costs because they remain constant regardless of driving distance or usage.
3. Recognize that fuel expenses change directly with how much the car is driven, making them variable costs.
4. Classify fuel expenses as a variable cost because they increase with more driving and decrease with less driving.
5. Conclude that among the given options, fuel expenses are typically classified as a variable cost.