A developer uses the output method to determine their % of completion for their construction projects. They
Question:
A developer uses the output method to determine their % of completion for their construction projects. They are currently constructing and selling 10 residential units and estimate to incur the following costs: Fulfilment costs, $10,000,000; Development Costs, $20,000,000. They estimate that the cost to be allocated per residential unit would be as follows: Fulfilment cost, $1,000,000; Development cost, $2,000,000. For the current year the company already incurred $10,000,000 for fulfilment costs, $1,000,000 per unit for development costs and the company architect also estimated the units to be 60% complete.
How much would be classified as real estate inventory in the company's books?
If one unit is sold during the year, how much is the cost of sales for year 1?
Quantitative Analysis for Management
ISBN: 978-0132149112
11th Edition
Authors: Barry render, Ralph m. stair, Michael e. Hanna