Why are petrol charges fixed



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Hi Binny,

While explaining the the terminology "operating expenses",you said that can also be called as Fixed costs. On that note,you also mentioned that petrol charges also come under operating expense, but they are not fixed and is dependent on the number of Pizzas orders that month as you have to deliver few of them physically.Less pizza orders,less petrol.
So how come we can say petrol expense Fixed?

1 Answer(s)


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Good point. In such cases that part ("delivery of pizza") of petrol expenses could be allocated to COGS and the remaining petrol expenses (general corporate purposes) will be allocated to Opex.