You are preparing the marketing budget for the next fiscal year, and the finance department staff has given you the following guidelines to follow when estimating certain aspects of the budget: You should allocate $250,000 for the total annual office expense for the marketing department.
For each marketing campaign that you plan to run, you should allocate $10,000 for supplies expense.
For each new product introduction that you plan to execute, you should allocate $5,000 for travel expenses.
You should allocate $25,000 for storage expenses for the entire year.
With respect to the costs included in the guidelines communicated from finance, you can conclude that
A) office expense and travel expenses are both fixed costs.
B) office expense and storage expenses are both variable costs.
C) storage expenses and travel expenses are both variable costs.
D) travel expenses and supplies expenses are variable costs.
E) office expense and supplies expenses are fixed costs.

Question

Quizplus · Accepted Answer

Based on the given guidelines, the costs for supplies and travel expenses vary depending on the number of campaigns and new product introductions planned. Therefore, both supplies expenses and travel expenses are variable costs. The office expense, as stated, is fixed, as it has a set amount allocated for the entire year regardless of the number of campaigns or new product introductions. The storage expense is also fixed, as there is a set amount allocated for the entire year.

You Are Preparing the Marketing Budget for the Next Fiscal