Certified Meeting Professional (CMP) Practice Exam

Which of the following best describes variable costs?

1. Costs that remain constant regardless of attendees

2. Costs that fluctuate with the number of attendees

3. Costs that include insurance and marketing

4. Costs that are not essential to event execution

The correct answer is: Costs that fluctuate with the number of attendees

Variable costs are defined as expenses that change in direct proportion to the number of attendees at an event. This means that as more participants are registered, these costs will increase, and as fewer participants attend, the costs decrease. Examples of variable costs include catering, materials, and accommodations, all of which are closely linked to the level of attendance. The other options do not fit this definition. Constant costs refer to fixed expenses that do not vary with attendance, such as venue rental fees, while costs related to insurance and marketing can be considered fixed or variable but do not inherently describe variable costs. Additionally, costs that are deemed non-essential to event execution may include both fixed and variable expenses but do not specifically define the concept of variable costs. Thus, understanding variable costs as expenses that fluctuate with attendance is crucial for budget planning in event management.