With a CAM expense of $30,000 and an occupancy rate of 70%, what operating expense amount appears on the Cash Flow report?

To determine the operating expense amount that appears on the Cash Flow report, first, it's essential to understand how occupancy rates impact the calculation of common area maintenance (CAM) expenses.

In this scenario, the CAM expense is $30,000. However, this amount would only apply fully if the property were fully occupied (100% occupancy). Since the occupancy rate is 70%, we need to calculate the proportion of the CAM expense that corresponds to the occupied space.

To find the operating expense amount to be reported, you multiply the total CAM expense by the occupancy rate:

Operating Expense = CAM Expense × Occupancy Rate

Operating Expense = $30,000 × 0.70

Operating Expense = $21,000

When interpreting this result in the context of the choices provided, option B is presented as $26,400, which doesn't align with the calculated $21,000. This suggests that the correct choice for the operating expense based on a 70% occupancy should have been $21,000.

The confusion may arise from miscalculating the effect of occupancy on the distribution of the CAM expenses. The operating expenses reported should accurately reflect the actual expenses incurred based on the level of occupancy, leading back to the conclusion that with an occupancy