Problem 22-5AB Allocation of joint costs LO C3 [The following information applies to the questions displayed below.] 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, 2015 No. 1 No. 2 No. 3 Combined $486,000 Sales (by grade) No. 1: 270,000 lbs. @ $1.80/lb No. 2: 270,000 lbs. @ $1.20/1b No. 3: 1,080,000 lbs. @ $0.25/lb Total sales $324,000 $ 270,000 $1,080,000 Costs Tree pruning and care @ $0.20/1b Picking, sorting, and grading @ $0.15/lb Delivery costs 54,000 40,500 16,300 54,000 40,500 16,300 216,000 162,000 38,800 324,000 243,000 71,400 Total costs 110,800 110,800 416,800 638,400 Net income (loss) $375,200 $ 213,200 $ (146,800) $ 441,600 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 $32,600 of the $71,400 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $38,800 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery. Problem 22-5AB 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 x Indirect Cost Allocated Cost Percent of Allocation Base Numerator Denominator % of Total Nos. No. 1 No. 2 No. 3 Totals Picking, Sorting, and Grading: Grade Allocation Base Nos. x Indirect Cost Allocated Cost Percent of Allocation Base Numerator Denominator % of Total No. 1 No. 2 [ oo No. 3 01 Allocation Base x Indirect Cost Allocated Cost Totals Delivery: Grade Nos. No. 1 No. 2 Percent of Allocation Base Numerator Denominator % of Total No. 3 Totals Problem 22-5AB Part 2 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, 2015 No. 1 No.2 No. 3 Combined Costs Total costs 0 0 $ 0 $ $ $