Question

Heart & Home Properties is developing a subdivision that includes 490 home lots. The 220 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 270 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $41,000 and for each Hilltop lot is $110,000. The developer acquired the land for $1,800,000 and spent another $2,800,000 on street and utilities improvements. Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot. (Do not round your intermediate calculations.) Market Value Percent of Market Value Cost to Allocate Allocated Cost Quantity of Lots Average Lot Cost Numerator Denominator | % of Mkt Value Canyon sectionſ Hilltop section 0 Totals

Answer 1

Answer:

	market value	Percent of Market value	Cost to allocate	Allocated cost	Quantity of Lots	Average Lot Cost
		Numerator	Denominator	% of Mkt Value
Canyon section	9020000	9020000	38720000	23.29545%	4600000	1071590.7	220	4870.87
Hilltop section	29700000	29700000		76.70455%		3528409.3	270	13068.18
Totals	38720000			100		4600000

Workings:

	market value	Percent of Market value	Cost to allocate	Allocated cost	Quantity of Lots	Average Lot Cost
		Numerator	Denominator	% of Mkt Value
Canyon section	=220*41000	9020000	38720000	=9020000/38720000	=1800000+2800000	=4600000*0.2329545	220	=1071590.7/220
Hilltop section	=270*110000	29700000		=29700000/38720000		=4600000*0.7670455	270	=3528409.3/270
Totals	38720000			100		4600000