Asked by
Meredith Yongco
on Dec 01, 2024
Verified
Pleasant Hills Properties is developing a golf course subdivision that includes 250 home lots; 100 lots are golf course lots and will sell for $95,000 each; 150 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 golf course lots using value basis.(Round your intermediate percentages to 2 decimal places.)
A) $1,920,000.
B) $720,000.
C) $1,620,800.
D) $1,579,200.
E) $1,080,000.
Joint Cost
Costs that are incurred in the process of producing two or more products simultaneously and cannot be easily attributed to individual products.
Value Basis
A method for calculating the cost of an investment, typically used to determine the gain or loss on the sale or disposition of the asset.
Golf Course Lots
Parcels of land designated or developed for the purpose of constructing golf courses, often classified as commercial real estate.
- Calculate joint costs and allocate them to different products or departments using the value basis method.
Verified Answer
CF
Learning Objectives
- Calculate joint costs and allocate them to different products or departments using the value basis method.