Belgrade Lakes Properties is developing a golf course subdivision that includes 225 home lots; 100 lots are golf course lots and will sell for $95,000 each; 125 are street frontage lots and will sell for $65,000. The developer acquired the land for $1,800,000 and spent another $1,400,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the street frontage lots using value basis.
A) $1,724,800.
B) $1,777,920.
C) $2,018,920.
D) $1,422,080.
E) $1,475,200.

Question

Quizplus · Accepted Answer

The total sales value is $15,250,000 ($9,500,000 from golf course lots and $8,125,000 from street frontage lots). The joint cost is $3,200,000. The allocation to street frontage lots is ($8,125,000 / $15,250,000) * $3,200,000 = $1,475,200.

Belgrade Lakes Properties Is Developing a Golf Course Subdivision That