Project Management Professional PMP · Free Practice Question Easy
Question 178
You manage a project with a $75,000 budget, and there is no room for project expenses to go past this constraint. Your project management office has asked you to provide a list of variable costs that may need to be factored into a budget. Which of the following is an example of a variable cost?
- A Rent for a warehouse that is required for storing backfill.
- B A $300 incentive fee that a vendor requires at the completion of the project.
- C Iron purchased for manufacturing.
- D The cost of the permit fee for a permit required to start construction.
Reveal correct answer
Correct answer: C
Explanation
The iron required for manufacturing is an example of a variable cost. A variable cost refers to a cost that fluctuates with the amount of work being done. The money spent on the iron will vary depending on how much iron is necessary for the project. All the other examples are fixed costs. These fixed costs do not change in the project. The rent for the warehouse will be the same regardless of how much project work is complete. The same can be said of the permit fee and the flat, $300 incentive fee.Discussion
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