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Dreamland, Inc. owns a building that consists of 4 floors. Each floor is divided into 4 equal spaces and is set up to house 3 small businesses. For $6,000 a month, a business is provided access to a 600 square foot space that it can build out as appropriate for its operations, in addition to a shared space that includes a logistics department, an IT department, a kitchen, and bathrooms.

The

shared space is considered a fixed cost and costs $2,000 a month per floor to operate regardless of occupancy. Additional monthly fixed costs incurred by the company equal $5,400. The only variable costs incurred by Dreamland relates to utilities paid on the occupied business spaces and the shared space.

In it's first month of operations, 10 of the available 12 business spaces were occupied. Monthly operating costs for the entire building during the first month of operations was $41,600. Which of the following statements is incorrect if square footage from occupied units is used as the cost driver for predicting operating costs?

A.

If all 12 of the available business spaces are occupied, the expected monthly operating expenses would be $47,240.

B.

If the building is fully occupied, the total expected variable costs per month would be $33,840.

C.

In its first month of operations, Dreamland's operating income was $18,400.

D.

The annual fixed costs are expected to be $88,800.

E.

Monthly costs are expected to increase by $4.70 for each additional square foot that is occupied.

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