# Occupancy cost ratio formula

Jun 25, 2019 · If calculating for a season, divide by 7. If calculating for a year, divide by 13. Here's a cost example: If a clothing retailer has an average inventory of \$100,000 and the cost of goods sold is \$200,000, then you would divide \$200,000 by \$100,000 to give you a ratio of 2:1, which can be expressed simply as 2. Aug 06, 2016 · I don’t for sure know you’re definition of “occupancy”. I would assume the practical application would be to compute the percentage of a structure, a building, or a space that is being used by some number of tenants. If you forecast \$875,000 in sales for your quick serve restaurant and the base rent is \$10,000 per month, the base rent to sales ratio is 13.7%. This would be considered an expensive site to lease since additional occupancy costs still need to be factored such as CAM, insurance, and real estate taxes. The occupancy rate’s real benefit is its ability to predict financial performance. Marginal Revenue Benefit of the Occupancy Rate In managerial accounting (cost accounting) two terms dominate concepts and principles – fixed and variable costs. The occupancy rate is one of the formulas used in cost accounting for the temporary housing industry. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal property taxes, insurance on building and contents, depreciation, and amortization expenses. These are generally higher in new entrants to a market due to the escalating real estate prices. Jan 21, 2017 · Occupancy cost percentage is the percentage of a tenant’s total revenue that goes towards covering the costs of occupying their space. The tenant’s annual occupancy cost is the sum of all costs associated with occupying their space such as base rent, common area maintenance reimbursements, real estate tax reimbursements, and percentage rent.