Luca was a professional classical guitar player until a motorcycle accident 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? $700, and the fixed monthly operating costs are as? follows:

Rent and utilities	?$810
Wages and benefits to luthier	?2,500
Other expenses	480

?Luca's accountant told him about contribution margin? ratios, and Luca understood clearly that for every dollar of? sales, $0.60 went to cover his fixed? costs, and anything above that point was profit.

Luca is planning to increase the sales price to? $750. What impact will the increase in sales price have on the contribution margin? ratio?

A.

It will stay the same.

B.

It will increase to? 53.33%.

C.

It will decrease to approximately? 49.33%.

D.

It will increase to approximately? 62.67%.