Georgia Orchards produced a good crop of peaches this year. After preparing the following income statement, the company believes it should have given its No. 3 peaches to charity and saved its efforts.

GEORGIA ORCHARDS Income Statement For Year Ended December 31, 2013
		No. 1			No. 2			No. 3			Combined
Sales (by grade)
No. 1: 262,500 Ibs. @ $1.80/lb	$	472,500
No. 2: 262,500 Ibs. @ $1.40/lb				$	367,500
No. 3: 1,050,000 Ibs. @ $0.20/lb							$	210,000
Total sales											$	1,050,000
Costs
Tree pruning and care @ $0.40/Ib		105,000			105,000			420,000				630,000
Picking, sorting, and grading @ $0.10/Ib		26,250			26,250			105,000				157,500
Delivery costs		16,200			16,200			38,700				71,100
Total costs		147,450			147,450			563,700				858,600
Net income (loss)	$	325,050		$	220,050		$	(353,700	)		$	191,400

In preparing this statement, the company allocated joint costs among the grades on a physical basis as an equal amount per pound. The company