The NCIDQ IDPX exam tests the designer’s understanding of business operations, specifically the classification of expenses in a design firm. Administration, marketing, and management expenses are ongoing costs that support the firm’s operations but are not directly tied to a specific project.

Option A (Indirect labor):Indirect labor refers to employee time that is not billable to a specific project (e.g., administrative staff salaries). While administration expenses may include indirect labor, marketing and management expenses encompass broader costs (e.g., advertising, office supplies), making this option too narrow.

Option B (Billable hours):Billable hours are time spent on specific projects that can be directly charged to a client. Administration, marketing, and management expenses are not billable, as they support the firm’s general operations, not a particular project.

Option C (Direct materials):Direct materials are costs for materials used on a specific project (e.g., paint, fabric). Administration, marketing, and management expenses are not project-specific material costs.

Option D (Facility overhead):This is the correct choice. Facility overhead includes general operating expenses that support the firm’s operations, such as administration (e.g., office staff salaries), marketing (e.g., advertising), and management (e.g., executive salaries, office rent). These are not directly tied to a specific project but are necessary for the firm to function.

Verified Answer from Official Source:

The correct answer is verified from NCIDQ’s official study materials on professional practice and business operations.

“Facility overhead includes expenses such as administration, marketing, and management, which are general operating costs not directly attributable to a specific project.” (NCIDQ IDPX Study Guide, Professional Practice Section)

The NCIDQ IDPX Study Guide defines facility overhead as general operating expenses like administration, marketing, and management, which aligns with Option D. This classification ensures these costs are properly accounted for in the firm’s financial management, making it the correct answer.

Objectives:

Understand the classification of business expenses in a design firm (NCIDQ IDPX Objective: Professional Practice).

Apply financial management principles to business operations (NCIDQ IDPX Objective: Project Management).