Chirayuthchai TraisaengsatheanStrategic Finance for Property Development
THEN

Cost allocation per unit: Area, RSV and Hybrid

Compares cost of sales per unit and gross margin for each unit type when costs are allocated by area, by sales value (RSV) or by a hybrid of the two

CalculatorProject Accounting

Extracted from Real Estate Project Accounting Handbook · Appendix C Template 2 Unit Cost Allocation
Example from Template 2: EAC of THB 1,046 m, with unit types 1BR 180 units, 2BR 54 units and 3BR 13 units. Total area and selling prices are calculated from the table.

THB
Remaining % uses RSV
Unit type
TypeNumber of unitsArea/unit (sq m)Selling price/unit
  • Total saleable area–
  • Total sales value–
  • Cost/sq m (Area)–
  • Cost-to-Revenue (RSV)–
  • Project GM–
Cost per unit and gross margin
TypeSelling priceArea costGM AreaRSV costGM RSVHybrid costGM Hybrid

Results are calculations for learning purposes. The figures entered are hypothetical examples, not real project data.

How to read the results

  • Area Method allocates by area, so GM differs by unit type according to price per sq m. Larger units that sell for more per sq m will have a higher GM.
  • RSV Method allocates by sales value, so GM is the same for every unit type.
  • Hybrid applies weights from both methods. It suits cases where some costs vary with area and others vary with specification.

Whichever method is used, the project's total cost stays the same. The only difference is the timing of profit recognition when unit types transfer at different times. Choose a method that is reasonable and apply it consistently.

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