Question
Slate was a professional classical guitar player until a motorcycle accident at left him disabled. After long months of therapy, he hired an experienced luthier
|
Slate was a professional classical guitar player until a motorcycle accident at left him disabled. After long months of therapy, he hired an experienced luthier and started a small shop to make and sell Spanish guitars. The guitars sell for
$ 705$705
each, and the fixed monthly operating costs are as follows:
Rent and utilities | $ 810$810 |
Wages and benefits to luthier | 2 comma 5102,510 |
Other expenses | 470470 |
Slate's accountant told him about contribution margin ratios, and Slate understood clearly that for every dollar of sales,
$0.6060
went to cover his fixed costs, and anything above that point was profit.Slate is planning to increase the sales price to
$ 880$880.
What impact will the increase in sales price have on the breakeven point in units? (Round your answer up to the nearest whole guitar.)
A.It will go down from
99
to
77
units.
B.It will go down from
1313
to
88
units.
C.It will go up from
88
to
1313
units.
D.
It will stay the same.
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