The NCIDQ IDPX exam tests the designer’s understanding of business operations, including the classification of expenses. Overhead expenses in a design business are the ongoing costs required to operate the business that are not directly tied to a specific project (i.e., not billable to a client).
Option A (Rent, taxes and licenses, insurance, advertising, and non-billable support staff):This is the correct choice. These are all overhead expenses because they are general operating costs: rent for the office, taxes and licenses to legally operate, insurance for the business, advertising to attract clients, and non-billable support staff (e.g., administrative staff not assigned to specific projects). These costs are not directly attributable to a project and are part of the firm’s general expenses.
Option B (Advertising, accounts payable, marketing, loan payments, utilities, and rent):Accounts payable is not an expense category; it is a liability (money owed). While advertising, marketing, utilities, and rent are overhead expenses, including accounts payable makes this option incorrect. Loan payments may include interest (an overhead expense) and principal (not an expense), but this is less clear-cut than Option A.
Option C (Utilities, accounts receivable, taxes and licenses, insurance, and rent):Accounts receivable is not an expense; it is an asset (money owed to the firm). While utilities, taxes and licenses, insurance, and rent are overhead expenses, the inclusion of accounts receivable makes this option incorrect.
Option D (Billable support staff, rent, advertising, loan payments, utilities, and insurance):Billable support staff are a direct project expense, not an overhead expense, because their time is charged to specific projects. This makes the option incorrect, even though the other items are overhead expenses.
Verified Answer from Official Source:
The correct answer is verified from NCIDQ’s official study materials on professional practice and business operations.
“Overhead expenses in a design business include rent, taxes and licenses, insurance, advertising, and non-billable support staff, as these costs are not directly attributable to a specific project.” (NCIDQ IDPX Study Guide, Professional Practice Section)
The NCIDQ IDPX Study Guide defines overhead expenses as general operating costs not tied to a specific project. Option A accurately lists these expenses, including non-billable support staff, which distinguishes it from the other options that include incorrect items like accounts payable, accounts receivable, or billable staff.
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).
[References:, NCIDQ IDPX Study Guide, Professional Practice Section., National Council for Interior Design Qualification (NCIDQ), IDPX Exam Blueprint,Section on Professional Practice., ]