[The following information applies to the questions displayed below. Georgia Orc

Question

[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 Sales (by grade) No. 1: 247,500 lbs.$1.80/lb No. 2: 247,500 lbs. @ $1.4??? No. 3: 990,000 lbs. $0.20/lb Total sales $445,500 5346,500 $ 198,00O $990,000 Costs Tree pruning and care $0.40/lb Picking, sorting, and grading $0.10/lb Delivery costs 99,000 24,750 15,400 99,000 24,750 15,400 396,000 99,000 38,000 594,000 148,500 68,800 Total costs 139,150 533,000 811,300 Net income (oss) 5306,350 $207,350 (335,000) $ 178,700 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 $30,800 of the $68,800 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $38,000 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.

Explanation / Answer

Solution 1:

Solution 2:

Allocation of Tree Pruning and Card - Georgia Orchards Grade Allocation Base Percentage of allocation base * Indirect Cost Allocated Cost Numerator Denominator % of Total No 1 Sale Value $445,500.00 $990,000.00 45.00% $594,000.00 $267,300.00 No 2 Sale Value $346,500.00 $990,000.00 35.00% $594,000.00 $207,900.00 No 3 Sale Value $198,000.00 $990,000.00 20.00% $594,000.00 $118,800.00 Totals $594,000.00

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