Explain why fixed and variable costs factor into the profitability of carrier operations|My homework helper

Fixed costs and variable costs are critical factors in determining the profitability of a carrier operation as they determine the company’s operating expenses.

Fixed costs are expenses that do not change with changes in the volume of goods or services produced. Examples include rent, salaries, and insurance. These costs must be covered regardless of the level of production, and if not covered, can impact the overall profitability of the operation.

Variable costs, on the other hand, are expenses that directly change with the volume of goods or services produced. Examples include fuel, maintenance, and labor costs associated with loading and unloading goods. As the volume of goods or services produced increases, so do variable costs, and if not properly managed, can also impact the overall profitability of the operation.

In conclusion, both fixed and variable costs play a crucial role in determining the profitability of a carrier operation. By properly managing these costs and ensuring that they are covered, a carrier can increase its profitability and ensure long-term success.