Example: Ponderosa Development Corporation
Ponderosa Development Corporation (PDC) is a small real estate developer operating in the Rivertree Valley. It has seven permanent employees whose monthly salaries are given in the table on the next slide.
PDC leases a building for $2,000 per month. The cost of supplies, utilities, and leased equipment runs another $3,000 per month.
PDC builds only one style house in the valley. Land for each house costs $55,000 and lumber, supplies, etc. run another $28,000 per house. Total labor costs are figured at $20,000 per house. The one sales representative of PDC is paid a commission of $2,000 on the sale of each house. The selling price of the house is $115,000.