Problem 6

Doran Realty Company purchased a plot of ground for $900,000 and spent $2,100,000 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.

Instructions

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

No. of Selling Total % of Apportioned Cost

Grade Lots Price Revenue Total Sales Total Per Lot

Highland 20 $ $ $ $

Midland 40 $ $

Lowland 100 $ $

160 $ $

2. Compute the gross profit for each grade and the total gross profit.