Question 17

Martin, a guitar enthusiast, hired an experienced helper and started a small shop to make and sell Spanish guitars. The guitars sell for $900, and the fixed monthly operating costs are as follows:

Rent and utilities $800

Wages/benefits to helper 2,000

Other expenses 474

Martin's accountant told him about contribution margin ratios, and Martin understood clearly that for every dollar of sales, $0.65 went to cover his fixed costs, and anything above that point was profit. Martin wishes to earn $4,000 of operating profit each month. Calculate the number of guitars Martin will need to sell to achieve the target profit (round answer up to the nearest whole guitar).

	A.	3 guitars
	B.	12 guitars
	C.	4 guitars
	D.	13 guitars