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:
1) You should allocate $250,000 for the total annual office expense for the marketing department.
2) For each marketing campaign that you plan to run, you should allocate $10,000 for supplies expense.
3) For each new product introduction that you plan to execute, you should allocate $5,000 for travel expenses.
4) 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

​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:
1) You should allocate $250,000 for the total annual office expense for the marketing department.
2) For each marketing campaign that you plan to run, you should allocate $10,000 for supplies expense.
3) For each new product introduction that you plan to execute, you should allocate $5,000 for travel expenses.
4) 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.

Quizplus · Accepted Answer

The guidelines specify that $10,000 should be allocated for supplies expense for each marketing campaign that is planned, and $5,000 should be allocated for travel expenses for each new product introduction that is planned. Since the number of campaigns and product introductions will vary and affect the total expenses, both supplies and travel expenses are considered variable costs. The allocation of $250,000 for office expense and $25,000 for storage expenses are fixed costs, as they do not vary depending on the number of campaigns or products introduced.

​You Are Preparing the Marketing Budget for the Next Fiscal

You Are Preparing the Marketing Budget for the Next Fiscal