Question

MC Qu. 143 Pleasant Hills Properties is developing... Pleasant Hills Properties is developing a golf course subdivision that includes 225 home lots; 100 lots are golf course lots and will sell for $102,000 each; 125 are street frontage lots and will sell for $72,000. The developer acquired the land for $1,870,000 and spent another $1,470,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the street frontage lots using value basis. (Round your intermediate calculation to one decimal place.)

Answer 1

Apportioned joint cost to = $1,565,625.00

Step-by-step explanation:

The total joint cost is the sum of the cost of the land and the cost of street utilities.

The joint cost = $1,870,000 + $1,470,000= $3,340,000.00

The total sales value of the two types of lots is equal to

(100× 102,000) + (125× 72,000) = 19,200,000.

The apportioned joint cost to street frontage:

((125× 72,000)/19,200,000 × 3,340,000.00 ) = $1,565,625.00

Apportioned joint cost to = $1,565,625.00