Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Martin was a professional classical guitar player until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (a

image text in transcribed

Martin was a professional classical guitar player until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (a maker of stringed instruments) and started a small shop to make and sell Spanish guitars. The guitars sell for $800, and the fixed monthly operating costs are as follows: Rent and utilities Wages and benefits to luthier Other expenses $800 $2,500 $474 Martin's accountant told him about contribution margin ratios, and Martin understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and anything above that point was profit Martin wishes to earn $2,500 of operating profit each month. Calculate the number of guitars Martin will need to sell to achieve the target profit. (Round your answer up to the nearest whole guitar.) O A. 12 guitars OB. 5 guitars O C. 10 guitars OD. 3 guitars

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurship

Authors: Andrew Zacharakis, William D Bygrave

5th Edition

1119563097, 9781119563099

More Books

Students also viewed these Accounting questions

Question

Explain how characteristics of MNCs can affect the cost of capital.

Answered: 1 week ago