Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled. After long months of
Question:
Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars. The guitars sell for $600, and the fixed monthly operating costs are as follows:
Rent and utilities....................................................$960
Wages and benefits of luthier.............................$1,500
Other.....................................................................$900
Juan got confused when his accountant told him about contribution margin ratios, but he understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and that anything past that point was pure profit.
Juan wishes to make $2,500 of operating profit each month. If so, how many guitars will Juan have to sell?
A) 12
B) 14
C) 18
D) 9
Thermodynamics for Engineers
ISBN: ?978-1133112860
1st edition
Authors: Kenneth A. Kroos, Merle C. Potter