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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

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: 408,000 Ibs. @ $1.20/lb $ 489,600
No. 2: 408,000 Ibs. @ $0.80/lb $ 326,400
No. 3: 680,000 Ibs. @ $0.30/lb $ 204,000
Total sales $ 1,020,000
Costs
Tree pruning and care @ $0.25/Ib 102,000 102,000 170,000 374,000
Picking, sorting, and grading @ $0.20/Ib 81,600 81,600 136,000 299,200
Delivery costs 15,200 15,200 37,700 68,100
Total costs 198,800 198,800 343,700 741,300
Net income (loss) $ 290,800 $ 127,600 $ (139,700 ) $ 278,700

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 $30,400 of the $68,100 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $37,700 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.

Problem 24-5AC Part 1

Required: 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 Percent of Allocation Base x Indirect Cost Allocated Cost
Nos. Numerator Denominator % of Total
No. 1 0
No. 2 0
No. 3 0 0
Totals 0
Picking, Sorting, and Grading:
Grade Allocation Base Percent of Allocation Base x Indirect Cost Allocated Cost
Nos. Numerator Denominator % of Total
No. 1 0
No. 2 0
No. 3 0 0
Totals 0
Delivery:
Grade Allocation Base Percent of Allocation Base x Indirect Cost Allocated Cost
Nos. Numerator Denominator % of Total
No. 1 0
No. 2 0
No. 3
Totals

2. Using your answers to part 1, prepare an income statement using the joint costs allocated on a sales value basis. (Do not round intermediate calculations.)

GEORGIA ORCHARDS
Income Statement
For Year Ended December 31, 2018
No. 1 No. 2 No. 3 Combined
Costs
Total costs 0 0 0 0
$0 $0 $0 $0

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