Certified in Logistics, Transportation and Distribution (CLTD) 2025 – 400 Free Practice Questions to Pass the Exam

The operating ratio is a financial metric used to assess the efficiency of a company's management by comparing operating expenses to net sales. In the context of logistics, transportation, and distribution, operating expenses typically include costs directly involved in carrying out operations.

Insurance and toll costs are classified as operating expenses because they are necessary for the functioning of transportation operations. Insurance protects the business from potential risks and liabilities, while tolls are direct costs incurred when transporting goods via roads that require payment. Both these expenses are directly tied to the logistics operations and thus contribute to the calculation of the operating ratio.

On the other hand, while salaries of administrative staff, fuel costs for office vehicles, and warehouse lease payments may impact overall organizational costs, they may not always be classified in the same manner. Salaries for administrative staff can be seen as part of overhead rather than direct operating expenses tied to logistics activities. Fuel costs may also be associated with operational activities, but in this context, office vehicles are not primarily utilized for logistics operations. Warehouse lease payments could be debated but are typically viewed in a broader context of fixed costs rather than day-to-day operating expenses unless they directly relate to shipping and receiving functions.

Thus, insurance and toll costs are the most appropriate choice for classification as operating expenses