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, 2019 No. 1 No. 2 No. 3 Combined Sales (by grade) No. 1: 257,580 Ibs. $1.80/1b $463,500 No. 2: 257, see Ibs. $1.40/1b $360,500 No. 3: B24,000 lbs. @ $0.25/16 $ 205,000 Total sales $1,030,000 Costs Tree pruning and care $0.50/16 128,750 128,750 412,000 669,500 Picking, sorting, and grading @ $e.10/16 25,750 25,750 82,400 133,900 Delivery costs 16,000 16,000 38,400 70,400 Total costs 170,500 170,5ee 532,800 873,800 Net income (los) $293,000 $190,000 $(326,888) $ 156,200 In preparing this statement, the company allocated joint costs among the grades on a physical basis as an equal amount per pound. The company's delivery cost records show that $32,000 of the $70,400 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $38,400 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery. 1. Prepare reports showing cost allocations on a sales value basis to the three grades of peaches. Separate the delivery costs into the amounts directly identifiable with each grade Then allocate any shared delivery costs on the basis of the relative sales value of each grade (Do not round intermediate calculations.) Tree Pruning and Care: Grade Allocation Base Nos Sales value No. 1 No. 2 No. 3 Totals Picking. Sorting, and Grading: Grade Allocation Base Nos Sales value Percent of Allocation Base x Indirect Cost Allocated Cost Numerator Denominator of Total 463,500 1.030,000 45 001$ 669,500 $ 301.275 360,500 1,030,000 35.00 689,500 234 325 206.000 1,030,000 20.00 669,500 133,900 100.00 $ 669,500 x indirect Cost Allocated Cost Percent of Allocation Base Numerator Denominator of Total 163.600 1.000.000 4500 No. 1 $ 133,900 $ 60 255 Picking, Sorting, and Grading: Grade Allocation Base Nos Sales value No. 1 Percent of Allocation Base x Indirect Cost Allocated Cost Numerator Denominator % of Total 463,500 1,030,000 45.00 $ 133,900 $ 60.255 360,500 1,030,000 35.00 133,900 46,865 206,000 1,030,000 20.00 133,900 26,780 100.00 $ 133,900 No. 2 No. 3 Totals Delivery: Grade Nos No. 1 No. 2 Allocation Base Sales value Percent of Allocation Base x Indirect Cost Allocated Cost Numerator Denominator % of Total 463,500 824 000 56.25 $ 32,000 $ 18,000 360,500 824,000 43.75 32,000 14,000 100.00 38.400 S 70,400 No 3 Totals 2. Using your answers to part 1. prepare an income statement using the joint costs allocated on a sales value basi intermediate calculations.) GEORGIA ORCHARDS Income Statement For Year Ended December 31, 2019 No. 1 No. 2 No.3 Combined Sales $ 463,500 $ 360,500 $ 206,000 $ 1.030,000 Costs Tree pruning and care 306,500 128.750 412,000 Picking, sorting and grading 25,750 Delivery Total costs 332,250 128,750 412,000 0 Net income $ 131,250 $ 231,750 $(206,000) $ 1,030,000
