Georgia Orchards produced a good crop of peaches this year. After preparing the following income statement, the company is concerned about the net loss on its No. 3 peaches.

GEORGIA ORCHARDS Income Statement For Year Ended December 31, 2017
	No. 1			No. 2			No. 3				Combined
Sales (by grade)
No. 1: 247,500 Ibs. @ $1.80/lb	$	445,500
No. 2: 247,500 Ibs. @ $1.40/lb				$	346,500
No. 3: 990,000 Ibs. @ $0.20/lb							$	198,000
Total sales											$	990,000
Costs
Tree pruning and care @ $0.40/Ib		99,000			99,000			396,000				594,000
Picking, sorting, and grading @ $0.10/Ib		24,750			24,750			99,000				148,500
Delivery costs		15,400			15,400			38,000				68,800
Total costs		139,150			139,150			533,000				811,300
Net income (loss)	$	306,350		$	207,350		$	(335,000	)		$	178,700

In preparing this statement, the company allocated joint costs among the grades on a physical basis as an equal amount per pound. The companys delivery cost records show that $30,800 of the $68,800 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $38,000 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.