Certified Meeting Professional (CMP) Practice Exam

What type of costs are considered indirect costs in budget planning?

1. Materials and supplies

2. Staff salaries and wages

3. Venue rental fees

4. Catering costs

The correct answer is: Staff salaries and wages

Indirect costs in budget planning refer to expenses that are not directly tied to a specific project or activity but are necessary for the overall operation or administration of an organization or event. Staff salaries and wages fall into this category because they encompass the compensation for personnel who support multiple projects, rather than being tied to a single event or activity. These costs can include salaries of administrative staff, management, and anyone who may work on various events or functions simultaneously. Such indirect costs are typically allocated across different events or departments based on a formula, rather than being directly attributed to the direct functions of a specific project. In contrast, materials and supplies, venue rental fees, and catering costs are considered direct costs because they are specifically incurred for a particular event. These expenses can be easily traced back to the event and are often variable, changing with the scope and scale of the planned gathering. By understanding the distinction between direct and indirect costs, event planners can create more accurate budgets and allocate resources effectively.