Question
Steven was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier(maker
Steven was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier(maker of stringed instruments) and started a small shop to make and sell Spanish guitars. The guitars sell for
$ 700$700
and the fixed monthly operating costs are asfollows:
Rent and utilities | $ 1 comma 260$1,260 |
Wages and benefits to luthier | 2 comma 5002,500 |
Other expenses | 550550 |
Steven's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales,
$ 0.65$0.65
went to cover his fixed costs, and that anything past that point was pure profit.Steven wishes to earn
$ 5 comma 000$5,000
of operating profit each month. Calculate the number of guitars Steven will have to sell to achieve the target profit.
A.
2020
guitars
B.
2121
guitars
C.
1010
guitars
D.
3838
guitars
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