Certified Facility Manager (CFM) Practice Exam

Which class of expenses do telecommunication truck line charges fall under?

1. Capital expenditures (CapEx)

2. Operational expenses

3. Maintenance costs

4. Administrative costs

The correct answer is: Capital expenditures (CapEx)

Telecommunication truck line charges are classified as operational expenses. This is because they are regular, ongoing costs associated with the day-to-day running of the facility. Operational expenses encompass costs that are necessary for the operations of the business but do not contribute to the acquisition of fixed assets. Capital expenditures (CapEx), on the other hand, refer to significant investments that a facility manager makes in fixed assets such as buildings, machinery, or infrastructure, which typically provide benefits over a longer period. Since telecommunication truck line charges are incurred frequently and are related to the ongoing functioning of the communication systems rather than one-time investments, they do not fall under CapEx. Additionally, maintenance costs typically relate to expenses incurred for the upkeep of existing equipment and infrastructure to ensure they remain functional and reliable. While some operational expenses can sometimes overlap with maintenance, telecommunications charges specifically relate to service use and communication capabilities rather than the maintenance of any physical asset. Administrative costs are related to general management and administrative functions, including salaries for administrative staff and office supplies. Telecommunication charges do not fit within this realm as they are specific to the operational aspects of communication within the facility's day-to-day processes. Thus, the classification of telecommunication truck line charges as operational expenses accurately reflects their role