A dwelling construction subtotal is 2,400 sf×$145/sf. Separate garage and sitework subtotals are $28,000 and $14,000, and none overlap. What sum of these stated cost components results? No statement is made about whether a separately supported entrepreneurial incentive is embedded.
Correct Answer
D) $390,000
2400×145+28000+14000 = 390000. Common errors: reporting only the dwelling subtotal gives $348,000; leaving out the sitework subtotal gives $376,000; leaving out the garage subtotal gives $362,000.
Why This Is the Correct Answer
Option D is correct because 2,400 sf x $145/sf = $348,000 for the dwelling, and adding the $28,000 garage and $14,000 sitework gives $348,000 + $28,000 + $14,000 = $390,000. The components do not overlap, so each is included once.
Why the Other Options Are Wrong
Option A: $348,000
Option A, $348,000, reports only the dwelling subtotal (2,400 x $145). The $28,000 garage and $14,000 sitework must be added, giving $390,000.
Option B: $362,000
Option B, $362,000, leaves out the garage subtotal: $348,000 + $14,000 = $362,000. Adding the $28,000 garage gives $390,000.
Option C: $376,000
Option C, $376,000, leaves out the sitework subtotal: $348,000 + $28,000 = $376,000. Adding the $14,000 sitework gives $390,000.
List every line, add once
Write each cost component on its own line, check that none overlap, and add each one once.
How to use: Use this when a cost question lists several separate subtotals.
Exam Tip
Count the components named in the stem and make sure your total includes each one.
Common Mistakes to Avoid
- -Reporting only the main dwelling cost
- -Leaving out a separately stated garage or sitework cost
- -Adding a component that is already included in the unit rate
Concept Deep Dive
Analysis
This question tests adding stated cost components that do not overlap. The dwelling subtotal is area times unit cost, and the garage and sitework subtotals are added once each. The note about entrepreneurial incentive means the question asks only for the sum of the stated components.
Background Knowledge
Cost estimates often combine a square-foot cost for the main building with separate costs for garages, porches and sitework. The appraiser should account for all direct and indirect costs of constructing the improvements, and consider separately whether entrepreneurial incentive is included.
Real-World Application
An appraiser estimates a house at a per-square-foot rate from a cost service, then adds a detached garage and sitework such as grading and utility connections priced separately. The total gives the improvement cost before any incentive and depreciation analysis.
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The historical cost of an improvement was $350,000, and an appropriate index multiplier for the same scope of work is 1.20. Total depreciation is 20% of the trended cost, and site value is $175,000. What is the total indicated value?