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.

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 $32,800 of the $71,700 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $38,900 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.

GEORGIA ORCHARDS Income Statement For Year Ended December 31, 2015 No. 1 No. 2 No. 3 Combined Sales (by grade) No. 1: 360,000 lbs. $1.20/lb No. 2: 360,000 Ibs. $0.80/lb No. 3: 1,200,000 lbs.@ $0.15/lb Total sales $432,000 $288,000 $ 180,000 $900,000 Costs Tree pruning and care@ $0.20/lb Picking, sorting, and grading $0.08/lb Delivery costs 72,000 28,800 16,400 72,000 28,800 16,400 240,000 96,000 38,900 384,000 153,600 71,700 Total costs 117,200 117,200 374,900 609,300 Net income (loss) $314,800 $170,800 $ (194,900) $290,700 GEORGIA ORCHARDS Income Statement For Year Ended December 31, 2015 No. 1 No. 2 No. 3 Combined Sales (by grade) No. 1: 360,000 lbs. $1.20/lb No. 2: 360,000 Ibs. $0.80/lb No. 3: 1,200,000 lbs.@ $0.15/lb Total sales $432,000 $288,000 $ 180,000 $900,000 Costs Tree pruning and care@ $0.20/lb Picking, sorting, and grading $0.08/lb Delivery costs 72,000 28,800 16,400 72,000 28,800 16,400 240,000 96,000 38,900 384,000 153,600 71,700 Total costs 117,200 117,200 374,900 609,300 Net income (loss) $314,800 $170,800 $ (194,900) $290,700