Mountain Home Properties is developing a subdivision that includes 300 home lots. The 225 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 75 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $50,000 and for each Hilltop lot is $100,000. The developer acquired the land for $2,500,000 and spent another $2,000,000 on street and utilities improvements.
Required: Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot.