Question

Oriole Realty Corporation purchased a tract of unimproved land for $132,000. This land was improved and subdivided into building lots at an additional cost of $82,704. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.

Group		No. of Lots			Price per Lot
1		9			$7,200
2		15			9,600
3		17			5,760

Operating expenses for the year allocated to this project total $43,680. Lots unsold at the year-end were as follows.

Group 1		5 lots
Group 2		7 lots
Group 3		2 lots

At the end of the fiscal year Oriole Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for computational purposes to 4 decimal places, e.g. 78.7234% and final answer to 0 decimal places, e.g. 5,845.)

Net income$ ??

Answer 1

	Group	1	2	3	Total
A	No of Lots	9	15	17	41
B	Sales Price	7,200	9,600	5,760	22,560
C=A X B	Total Sales Price	64,800	144,000	97,920	306,720
D	Sales Price %	21.1268%	46.9484%	31.9249%	100
		(64800/306720) X 100	(144000/306720) X 100	(97920/306720) X 100
E	Total Cost	214,704	214,704	214,704
	(132000+82704)
F=D X E	Cost Allocated	45,360.00	100,800.00	68,544.00	214,704
G=F/A	Per Lot Cost	5,040.00	6,720.00	4,032.00	15,792
Selling Lots
	Group	1	2	3	Total
A	No of Lots	4	8	15	27
		(9-5)	(15-7)	(17-2)
B	Sales Price	7,200	9,600	5,760	22,560
C=A X B	Selling Price	28,800	76,800	86,400	192,000
D	Per Lot Cost	5,040	6,720	4,032	15,792
E=D X A	Estimated Cost	20,160	53,760	60,480	134,400
F=C-E	Gross Profit	8,640	23,040	25,920	57,600
	Net Income
	Sales	192,000
	Less:Cost of Goods Sold	(134,400)
	Gross Profit	57,600
	Less:Operating Expenses	(43,680)
	Net Income	13,920