It should be clearly understood that the frequent revision of the cost price of lots is not an inaccurate method, for the final results of the two methods are identical. This can best be shown by the calculations in the following simple example:

Suppose that of twelve lots composing a small subdivi-sion and each originally costing $360, one is sold each month during the year, and during that year improvements have been made continuously in such amounts that the cost of each unsold lot has increased $10 a month up to $480 at the last sale. In each case the selling price was $600, and each contract paid regularly $24 a month for every month of its existence, no "first payment" being demanded.

Calculated on the fixed price plan, the figures would be as follows:

Total sales, 12 lots at $600.....................................

........

$7,200

Total cost:

Purchase price, 12 lots at $360...............................

$4,320

Add improvements (11 X 10) + (10 X 10) +

(9 X 10), etc. = 66 X 10 =

660

4,980

Total gain..............................................

.........

$2,220

Total amount paid in, 78 payments at $24 each.................

..........

1,872