Operating Expense has two components, fixed expenses and variable expenses. The fixed expenses are ongoing expenses that do not vary based on occupancy levels of the property (e.g. Real estate taxes and insurance). Variable expenses are operating expenses necessary to the property, but dependent on the property's occupancy level (e.g. Utilities). Operating Expense - (Expense Amount x Fixed%) (Expense Amount x Variable % x Occupancy %) Utilities cost $15 per square foot per year but will fluctuate with occupancy. Only 25% of the expenses is fixed. The building is 35,000 SF and is currently 80% occupied. a. What is the total cost for utilities if the building was 100% occupied? 1 b. What will be the expense amount on the property cash flow for utilities