The pipelines provide their own rights of way, construct the pipelines and pumping stations, pay property taxes, and provide for the preventative maintenance of their transportation networks. This contributes to the high proportion of which of the following in the pipeline's cost structure?
A) variable costs
B) fixed costs
C) variable costs.
D) revenue costs

Question

Quizplus · Accepted Answer

The activities mentioned, such as providing rights of way, constructing pipelines and pumping stations, paying property taxes, and maintaining the transportation networks, are all associated with fixed costs. These are expenses that do not change with the level of output or activity, unlike variable costs which fluctuate with production volume.

The Pipelines Provide Their Own Rights of Way, Construct the Pipelines