In the context of trucking firms, which of the following is typically the largest single expense item?

• A. Insurance premiums
• B. Driver wages
• C. Vehicle maintenance
• D. Fuel costs

Answer: (D)

Verified step by step guidance

1. Identify the typical cost structure of trucking firms by categorizing their expenses into major groups such as fuel costs, driver wages, insurance premiums, and vehicle maintenance.
2. Understand that fuel costs are variable costs that depend directly on the amount of driving done, and they tend to be a significant portion of total operating expenses due to the high fuel consumption of trucks.
3. Recognize that driver wages, while substantial, are often fixed or semi-fixed costs and usually do not exceed fuel costs in total expenditure for most trucking firms.
4. Consider insurance premiums and vehicle maintenance as important but generally smaller expense categories compared to fuel and wages, since insurance is often a fixed annual cost and maintenance varies but is typically less than fuel.
5. Conclude that among the listed options, fuel costs are typically the largest single expense item for trucking firms because of the high volume of fuel consumed relative to other costs.