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Pratt, Inc. roasts premium, organic coffee for high-end restaurants. They have three major blends of coffee from the following origins; Ecuador, Peru, and Kenya. They
Pratt, Inc. roasts premium, organic coffee for high-end restaurants. They have three major blends of coffee from the following origins; Ecuador, Peru, and Kenya. They sell the coffee in 10 pound bags and had the following sales prices and volume of sales last year:e Type of coffee Ecuador = Peru Kenya Sales price $23.00 / bag S 24.50 /bag S27.25 /bag Sales volume 60,000 bagse 100,000 bags 40,000 bags Each bag of coffee requires 12.5 pounds of green coffee beans (unroasted). The roasting process strips away additional moisture, leaving 10 pounds as the end product. Last year, Pratt paid the following prices for green (raw) coffee beans and required the following labor hours for roasting one 10 pound bag of coffee (Pratt pays $17/hour for roasting): Type of coffee Ecuador Peru Kenya Price of beans Roasting hours /bage S 0.75 / pound 0.5 hours S0.85 / pound 0.75 hour; S0.65/ pound0.75 hour # After roasting the beans, Pratt then packages each 10 pound bag in its signature paper bags, which cost $0.75 per bag. The packaging process is handled by a packaging machine which Pratt rents for S 55,000 per year. During the last year, Pratt also incurred the following expenses: Amount Comments S 85,000 Paid by salary Type of expense President's Salary Quality control personnelS 68,000 Paid by salary Utilities Insurance Facility rent Advertising S 29 500l See comments below ( S 12,000Paid annually $115,000 Paid annually 35.000 See contractual terms below () Utilities- Management ran a linear regression for the past five years of utilities expenses (dependent variable) regressed against sales dollars (independent variable). The adjusted R 0.05
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