Cost per unit by net saleable area (NSA)
Calculates COGS per sq m and per unit by NSA, with the phantom profit and CIT that arise when GFA is wrongly used as the base
Related reading Real Estate Project Accounting Handbook · Part 4
The figures entered are hypothetical examples. Every field can be edited.
COGS per sq m (NSA basis)–
| COGS per unit (NSA basis, correct) | – |
|---|---|
| Gross profit per unit (NSA basis) | – |
| COGS per sq m if GFA is used (incorrect) | – |
| COGS per unit if GFA is used (incorrect) | – |
| Difference in COGS per sq m | – |
|---|---|
| Phantom profit per unit | – |
| Phantom profit on units transferred | – |
| Overstated CIT on units transferred | – |
| CIT if NSA is used | – |
| CIT if GFA is used | – |
| Costs left in WIP once the whole project has been transferred | – |
Results are calculations for learning purposes only. The figures entered are hypothetical examples, not real project data, and are not investment or tax advice.
How to use
- Enter the project's total cost, NSA and GFA
- Enter the unit size, unit selling price and number of units transferred in the period
- See how much phantom profit and excess CIT arise if costs are wrongly allocated using GFA
Assumptions and limitations
- COGS per sq m = total cost ÷ total NSA, allocated by area. If the project uses relative sales value, the calculation differs.
- If transfers begin before the work is complete, total cost must be actual cost plus the estimate to complete (EAC).
- CIT is calculated on the gross profit of the units transferred. It excludes SBT, selling and administrative expenses, accumulated losses and tax credits. If the profit is negative, CIT is zero.
- The default CIT rate of 20% is the standard rate, and all units are assumed to be the same size and price.
- Phantom profit is a timing issue. The difference in cost remains in WIP, but tax must be paid in the year of transfer.
Use this to test the effect of the allocation basis. Actual closing of the accounts must refer to the unit-level cost register and a method applied consistently throughout the project.