60.1K

Verified Solution

Link Copied!

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, 2013
		No. 1			No. 2			No. 3			Combined
Sales (by grade)
No. 1: 247,500 Ibs. @ $1.80/lb	$	445,500
No. 2: 247,500 Ibs. @ $1.40/lb				$	346,500
No. 3: 990,000 Ibs. @ $0.20/lb							$	198,000
Total sales											$	990,000
Costs
Tree pruning and care @ $0.40/Ib		99,000			99,000			396,000				594,000
Picking, sorting, and grading @ $0.10/Ib		24,750			24,750			99,000				148,500
Delivery costs		15,400			15,400			38,000				68,800
Total costs		139,150			139,150			533,000				811,300
Net income (loss)	$	306,350		$	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 companys 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. 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.) 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.) I have a good portion of this complete, if you would like an example or more information let me know. It is not letting me provide a screen shot. Thank you!

Answer & Explanation Solved by verified expert

See Answer