variable expenses

variable expenses

Property operating expenses that increase and decrease in relatively direct proportion to changes in occupancy. It is important to differentiate between fixed expenses and variable expenses because the fixed expenses must be met every month,no matter what the occupancies.In preparing a pro forma analysis for a new project,one will usually calculate fixed expenses starting with month 1 and continuing unchanged until perhaps another employee must be added to the payroll.Variable expenses, however, are always calculated as dependent on lease-up and tied to each month's occupancy figures if the pro forma is a spreadsheet.