Exercise 144 Doran Realty Company purchased a plot of ground for $1,900,000 and

Question

Exercise 144

Doran Realty Company purchased a plot of ground for $1,900,000 and spent $4,100,000 in developing it for building lots. The lots were classified into Highland, Midland, and Lowland grades, to sell at $120,000, $90,000, and $60,000 each, respectively.

Complete the table below to allocate the cost of the lots using a relative sales value method.

Apportioned Cost Grade No. of Lots Selling Price Total Revenue % of Total Sales Total Per Lot Highland 20 $

$

% $

$

Midland 40

%

Lowland 100

%

160 $

$

Explanation / Answer

Grade No. of Lots Selling Price Total Revenue % of Total Sales Total per lot Highland 20 120000 2400000 20% 1200000 60000 Midland 40 90000 3600000 30% 1800000 45000 Lowland 100 60000 6000000 50% 3000000 30000 160 12000000 6000000

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