Chapter 13 Flashcards
WHat factors affect how an expense budget is ppepared?
Owner’s obejectives
Market conditions
Property condition
leasing efforts
Why are detailed explanations for each line item important when preparing and expense budget?
Because they clarify the reasons for expeditions and facilitate the explanations of budget variances. They also define assumtions concerning growth, CPI projections, contract changes, projected rates, etc.
Where should expenses be budgeted for operations reported on the cash accounting basis?
In the month they will be paid.
Where should expenses be budgeted for operations reported on the accrual method?
In the month those expenses are accrued.
How is expense budgeting affected by the building’s history?
The longer the building history, the more knowledge and history can go into budgeting expenses.
List three general cost categories that are usually the largest expenses.
Utilities
Property Taxes
Payroll/Administration
What factors should be considered when budgeting for utilities?
Operating History
Building specificaions
Utility Rates
Upcoming Weather Patterns
What is the most effective tool for budgeting utilities?
A good poerating history of prior utility usage- 3 to 4 years of history
What should be used to estimate utilities if an operating history is not available?
Lighting and HVAC capacities adjusted for current building occupancy.
On what two components is the calculation of real property taxes based?
Real estate assessments
levy rates
What are levy rates?
Taxes set by local governments (also called mill rates)
List the public expenses for which levy rates are usually assessed.
Schools roads sewers public health and safety public employees bond interest
What are cost centers?
They are organizational units that incur expenses
List the usual taxes, benefits, and compensation categories associated with a payroll?
FICA Federal Unemployment State Unemployment Other state and local taxes workers comp health and life insurance training and education OT and PTO bonuses and raises 401K
List the typical monthly billing for building operations.
Landscaping janitorial HVAC security waste removal elevators pest control water treatment Anything with a monthly contract
