Situation #1:

Georgia Peaches LLC grows peach trees and harvests peaches. They can sell off the peaches by the pound after harvest, or they can further process the peaches into jam, cider, or salsa. Because of economies of scale, they have found that they would do the entire harvest as one of the four options (whole, jam, cider, or salsa); they do not have nor are able to invest in the equipment and resources needed to perform a combination of goods at this time. The data related to a typical harvest is as follows:

All costs associated with growing the peaches		$ 1,047,000
Picking and cleaning the peaches		$ 345,000
Sales value of intermediate products at split-off point:		$ 1,675,000
Costs of further processing intermediate products:
Jam		$ 157,150
Cider		$ 120,000
Salsa		$ 258,000
Sales value of end products:
Jam		$ 1,843,000
Cider		$ 1,795,000
Salsa		$ 1,947,000

Instructions:

1. Make a recommendation to the Controller: should Georgia Peaches LLC sell the peaches whole or process further into jam, cider, or salsa? Why? Support your answer with a computation or illustration to support that recommendation. And, given the information available to you, how much profit (or loss) will the company make if your recommendation is accepted?

Supporting Computation: Analysis of Buy or Process Further

Note: Company can only do one of the four (sell whole or process further into jam, cider, or salsa)