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 $700 each, and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | }
\hline \text { Rent and utilities } & \$ 810 \
\hline \text { Wages and benefits toluthier } & 2520 \
\hline \text { Other expenses } & 480 \
\hline
\end{array}$$ Slate's accountant told him about contribution margin ratios, and Slate understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and anything above that point was profit.
Slate is planning to increase the sales price to $820. What impact will the increase in sales price have on the breakeven point in units? (Round your answer up to the nearest whole guitar.)

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 and started a small shop to make and sell Spanish guitars. The guitars sell for $700 each, and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | } 
\hline \text { Rent and utilities } & \$ 810 \
\hline \text { Wages and benefits toluthier } & 2520 \
\hline \text { Other expenses } & 480 \
\hline
\end{array}$$ Slate's accountant told him about contribution margin ratios, and Slate understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and anything above that point was profit.
Slate is planning to increase the sales price to $820. What impact will the increase in sales price have on the breakeven point in units? (Round your answer up to the nearest whole guitar.)

Quizplus · Accepted Answer

The Answer of 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 $700 each, and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | } 
\hline \text { Rent and utilities } & \$ 810 \
\hline \text { Wages and benefits toluthier } & 2520 \
\hline \text { Other expenses } & 480 \
\hline
\end{array}$$ Slate's accountant told him about contribution margin ratios, and Slate understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and anything above that point was profit.
Slate is planning to increase the sales price to $820. What impact will the increase in sales price have on the breakeven point in units? (Round your answer up to the nearest whole guitar.)

Slate Was a Professional Classical Guitar Player Until a Motorcycle