SpringFresh provides commercial laundry and linen services to local hospitals, hotels, and restaurants. SpringFresh charges its customers $1.50 per pound laundered, regardless of the items to be cleaned (e.g., sheet, towel, garment, tablecloth). Spring-Fresh’s variable costs equal $0.50 per pound laundered, with fixed costs amounting to $50,000 per month. SpringFresh’s income tax rate is 25%.

Required:

a. Write down the expression for SpringFresh’s annual after-tax profit.

b. How much will SpringFresh pay in taxes if it processes 750,000 pounds of laundry this year? What would SpringFresh’s profit after taxes be?

c. What is SpringFresh’s annual breakeven volume in pounds of laundry processed?