Question

Wical Rental Management Services manages four apartment buildings, each with a different owner. Wical’s CEO has...

Wical Rental Management Services manages four apartment buildings, each with a different owner. Wical’s CEO has observed that the apartment buildings with more expensive rental rates tend to require more of her time and also the time of her staff. The four apartment buildings incur a total annual operating expense of \$7,363,733, and these operating expenses are traced directly to the apartment buildings for the purpose of determining the profit earned by the building owners. The annual management fee that Wical earns is based on a percentage of total annual operating expenses and is negotiated each year. For the current year, the fee rate is 6%, and Wical has the following information for current-year average rental rates and occupancy rates:

 Apartment Complex Number of Units Average Occupancy Average Rent Cape Point 100 88 % \$ 2,075 Whispering Woods 250 75 1,475 Hanging Rock 200 74 1,175 College Manor 350 84 1,075 Total 900

For the current year, Wical must choose between the number of units in each complex, the average occupancy, or the total annual rental revenue in each complex to allocate the management fee.

Required:

1. How much of the management fee would be charged to Cape Point under each of the three allocation bases (number of units, average occupancy, and total annual rental revenue, respectively)? (Do not round your intermediate calculations. Round your final answers to whole dollar amounts.)

multiple choice

• \$35,853; \$86,014; \$106,538

• \$49,092; \$121,123; \$85,003

• \$1,852,182; \$2,446,243; \$1,959,571

• \$54,623; \$118,143; \$86,922

 Apartment Complex # of Units Average Occupancy Average Rent Annual Rental Revenue Cape Point 100 88% 2075 182600 Whispering Woods 250 75% 1475 276562.5 Hanging Rock 200 74% 1175 173900 College Manor 350 84% 1075 316050 Total 900 321% 5800 949112.5 Operating Expenses 73,63,733.00 Management Fee @ 6% on operating expense is 441823.98 Allocation of management fee on different basis No of units 490.9155333 per unit Average Occupancy 1376.398692 per 1 % Annual Rental Revenue 0.465512761 per 1 \$ of rental revenue Apartment Complex # of Units Average Occupancy Annual Rental Revenue Cape Point \$ 49092 \$ 121123 \$ 85003

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