Property Management Licensing Practice Exam · Question
A property manager is preparing an operating budget for a multi-unit residential building. Which of the following would typically be categorized as a variable expense?
Variable expenses are those that change in proportion to the level of activity or usage. Utility costs, such as electricity or water, often fall into this categ
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Question: A property manager is preparing an operating budget for a multi-unit residential building. Which of the following would typically be categorized as a variable expense?
Answer options:
- Property insurance premiums
- Annual property taxes ✅ Utility costs (e.g., electricity, water) that fluctuate with usage
- Mortgage interest payments
Correct answer: Utility costs (e.g., electricity, water) that fluctuate with usage
Explanation: Variable expenses are those that change in proportion to the level of activity or usage. Utility costs, such as electricity or water, often fall into this category as they can fluctuate significantly based on tenant consumption and seasonal factors.
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