The 'area' method of allocating the costs of real estate developments to individual lots:

Question

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The 'area' method of allocating costs to individual lots should be used where lots with the same area have similar expected values. This is because the cost should be distributed in a way that is equitable to the potential value of each lot, and if the lots have similar features and dimensions, it is likely that they will have similar values. However, if the lot values differ significantly, it may be more appropriate to use a different method of cost allocation.

The 'Area' Method of Allocating the Costs of Real Estate