A 1,500 square foot office space is leased at $12.00 square foot. The space is vacant one month out of the year. Office expenses are $6.50 per square foot and an expense stop is set at $6.00 per square foot. What is the annual net operating income? $8,250 $15,750 $6,750 $7,500

$7500

Explanation:

An expense stop is a tool used by landlords to limit their operating costs and maintain predictable operating costs over the terms of the lease. Hence, even though the operating expense is $6.50, the landlord is only accountable for $6.

The operating costs annually would be: 1500 x 6 = 9000

(Even though the office space is vacant for one month of the year, maintenance costs will still be incurred throughout the year, whether leased or vacant)

Annual income :

1500 x 12 = $18000 (12 months)

It should be noted though that the office space is vacant for one month. Hence, landlord only receives 11 months worth of leased rent. Actual income : (18000/12) x 11 = $16500

Net operating income annually : Total income - Total expenses = $16500 - $9000 = $7500

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lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o