Problem 22-5AC 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 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: 277,500 Ibs. @ $1.80/lb	$	499,500
No. 2: 277,500 Ibs. @ $1.20/lb				$	333,000
No. 3: 1,110,000 Ibs. @ $0.25/lb							$	277,500
Total sales											$	1,110,000
Costs
Tree pruning and care @ $0.50/Ib		138,750			138,750			555,000				832,500
Picking, sorting, and grading @ $0.04/Ib		11,100			11,100			44,400				66,600
Delivery costs		16,700			16,700			39,200				72,600
Total costs		166,550			166,550			638,600				971,700
Net income (loss)	$	332,950		$	166,450		$	(361,100	)		$	138,300

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 $33,400 of the $72,600 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $39,200 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.

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 31,2018 No. 1 No. 2 No. 3 Combined Costs Total costs 0 0 0 0 0