Answer:
Each Canyon lot will cost = $10,000, total costs associated to the 450 Canyon lots = $4,500,000
Each Hilltop lot will cost = $20,000, total costs associated to the 150 Hilltop lots = $3,000,000
Explanation:
When you allocate joint costs using the value basis method, the costs will be allocated to the different products using their sales value:
total costs = $4,000,000 + $3,500,000 = $7,500,000
total sales value = (450 lots x $55,000) + (150 lots x $110,000) = $24,750,000 + $16,500,000 = $41,250,000
total costs allocated per $1 of sales value = $7,500,000 / $41,250,000 = $0.181818
Each Canyon lot will cost = $0.18181818 x $55,000 = $10,000, total costs associated to the 450 Canyon lots = $4,500,000
Each Hilltop lot will cost = $0.18181818 x $110,000 = $20,000, total costs associated to the 150 Hilltop lots = $3,000,000
