Peach, Inc. roasts and sells premium coffee in one pound bags. At their current facilities they have one roaster that is able to produce 10,000 pounds of coffee per month. They purchased this machine twelve years ago for $860,000 total and estimated a twenty year useful life. In this coming year, they plan to produce 95,000 pounds of roasted coffee and sell it for $18.50 / pound. They pay a master roaster $123,500 / year in salary, $42,000 in insurance per year, and facility rent of $45,000 per year. The tax rate is 35%. They also have the following costs related to production:

A. Utilities cost Upon running a linear regression with annual utilities cost as the dependent variable and units sold as the independent (x) variable, they found an adjusted R²=0.55. The equation of the line = 2.15x + 38,000.

B. Wages to packaging laborers Peach pays their laborers $18 / hour and they can package (on average) 10 bags / hour.

C. Each pound of coffee requires 1.3 pounds of unroasted coffee beans to begin the process. After the roasting process is complete, the beans lose some moisture and only weigh one pound. Peach currently buys unroasted coffee beans from a local farmer for $ 2.50 / pound.

D. The cost of packaging is $0.85 / pound of coffee.

Please assume that one bag of coffee includes one pound of roasted coffee beans.

Using the space below, please answer the following questions in order:

1. What is the contribution margin per finished pound of roasted coffee?

2. If Peach meets his estimated production goals, what will be his total annual profit after-tax?

3. What is the break-even point (in bags of coffee)?

4. What is his annual after-tax profit if he is producing at maximum capacity?

5. What will be his total (fixed, variable, tax) cost per unit if he operating at maximum capacity?