Question

Pleasant Hills Properties is developing a golf course subdivision that includes 225 home lots; 100 lots are golf course lots and will sell for $104,000 each; 125 are street frontage lots and will sell for $74,000. The developer acquired the land for $1,890,000 and spent another $1,490,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the golf course lots using value basis. (Round your intermediate calculation to one decimal place.)

$1,485,300.
$1,788,020.
$1,591,980.
$1,841,140.
$2,082,140.

Answer 1

Joint cost allocated to Golf course lots

= (100*104,000)/[(100*104,000)+(125*74,000)] * (1,890,000+1,490,000)

= 10,400,000/19,650,000 * (3,380,000)

= 1,788,020