For planned communities, common costs can be allocated to individual residential units using the:
A) relative interest allocation method.
B) relative capitalization of costs method.
C) relative area or relative sales value allocation method.
D) relative impact estimation process.

Question

Quizplus · Accepted Answer

The most common and widely accepted method for allocating common costs among residential units in planned communities is the relative area or relative sales value allocation method. This method allocates costs based on the relative size or market value of each unit compared to the total size or value of all units in the community. This method is commonly used because it is considered fair and equitable, as it allocates costs based on each unit's proportional contribution to the community. The other options listed are not commonly used in the industry or are less effective for allocating costs in planned communities.

For Planned Communities, Common Costs Can Be Allocated to Individual