Which expense is classified as a variable expense when preparing an operating budget?

The classification of expenses in an operating budget is crucial for financial management and planning. A variable expense is one that changes in relation to a company's production or sales volume. In this case, MLS listing fees are considered a variable expense because they can fluctuate based on the number of property listings a real estate agent or agency manages. When more properties are listed, more fees are incurred, making these costs directly tied to business activity levels.

On the other hand, fixed monthly rent is consistently the same, regardless of sales or activity level, which categorizes it as a fixed expense. Utilities can sometimes be variable but can also have a fixed component, depending on usage. Salaries, particularly if they are fixed salaries rather than commission-based or project-dependent pay, are typically considered fixed expenses as they do not drastically change on a month-to-month basis. This distinction clarifies why the MLS listing fees specifically fall under variable expenses in the context of the operating budget.