The following information applies to the questions displayed below.] Georgia Orc
ID: 2578748 • Letter: T
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 is concerned about the net loss on its No. 3 peaches.
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 $33,200 of the $72,200 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $39,000 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.
Problem 24-5AC 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.)
[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.
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 $33,200 of the $72,200 relates to crating the No. 1 and No. 2 peaches and hauling them to the buyer. The remaining $39,000 of delivery costs is for crating the No. 3 peaches and hauling them to the cannery.
Problem 24-5AB 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.)
Income Statement
For Year Ended December 31, 2017 No. 1 No. 2 No. 3 Combined Sales (by grade) No. 1: 272,500 Ibs. @ $1.80/lb $ 490,500 No. 2: 272,500 Ibs. @ $1.40/lb $ 381,500 No. 3: 872,000 Ibs. @ $0.25/lb $ 218,000 Total sales $ 1,090,000 Costs Tree pruning and care @ $0.50/Ib 136,250 136,250 436,000 708,500 Picking, sorting, and grading @ $0.10/Ib 27,250 27,250 87,200 141,700 Delivery costs 16,600 16,600 39,000 72,200 Total costs 180,100 180,100 562,200 922,400 Net income (loss) $ 310,400 $ 201,400 $ (344,200 ) $ 167,600
Explanation / Answer
Allocation of Joint cost on a Sales Value Basis GEORGIA ORCHARDS Income Statement For Year Ended December 31, 2017 No.1 No.2 No.3 Combined Sales (by grade) No. 1: 272,500 Ibs. @ $1.80/lb $490,500 No. 2: 272,500 Ibs. @ $1.40/lb $381,500 No. 3: 872,000 Ibs. @ $0.25/lb $218,000 Total sales $490,500 $381,500 $218,000 $1,090,000 Costs Tree pruning and care @ $0.50/Ib $318,825 $247,975 $141,700 $708,500 Picking, sorting, and grading @ $0.10/Ib $63,765 $49,595 $28,340 $141,700 Delivery costs $18,675 $14,525 $39,000 $72,200 Total costs $401,265 $312,095 $209,040 $922,400 Net income (loss) $89,235 $69,405 $8,960 $167,600 Sales value ratio = No.1 : No.2 : No.3 = 45% : 35% : 20% Sales value ratio of No.1 & No.2 = 56.25% : 43.75% (for allocation of delivery costs)
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