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This method is close, but your example assumes that the existing grade is terraced and that your fill is exactly 1′, 2′, 3′, 4′, and 5′ all the way down, but the existing grade is sloped. If you were to draw a cut section through there, it would be a diagonal line, not stepped. A simple solution would be using the average depth between the two lines for your cut and fill. For example, if you’re filling between the 4′ and 5′ line your depth should be the average (4.5′).
Here’s another solution that doesn’t require creating a bunch of tools with different depths. You would need a custom column to enter the depth on the high side (Dh), depth of the low side (Dl), and then a custom formula to calculate the cut/fill. Using this method you could use a single AREA measurement since you have to manually enter the depths each time.
Measurement*((Dl+Dh)/2)
For fill, I would enter positive depths, and cuts I would enter negative depths.