Ethan 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 $600,and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | }
\hline \text { Rent and utilities } & \$ 600 \
\hline \text { Wages and benefits to luthier } & 2,200 \
\hline \text { Other expenses } & 470 \
\hline
\end{array}$$ Ethan's accountant told him about contribution margin ratios,and Ethan understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and anything above that point was profit.
Ethan wishes to earn $5,000 of operating profit each month.Calculate the amount of sales revenue required to achieve the target profit.(Round your answer to the nearest dollar. )

Question

Ethan 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 $600,and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | } 
\hline \text { Rent and utilities } & \$ 600 \
\hline \text { Wages and benefits to luthier } & 2,200 \
\hline \text { Other expenses } & 470 \
\hline
\end{array}$$ Ethan's accountant told him about contribution margin ratios,and Ethan understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and anything above that point was profit.
Ethan wishes to earn $5,000 of operating profit each month.Calculate the amount of sales revenue required to achieve the target profit.(Round your answer to the nearest dollar. )

Quizplus · Accepted Answer

The Answer of Ethan 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 $600,and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | } 
\hline \text { Rent and utilities } & \$ 600 \
\hline \text { Wages and benefits to luthier } & 2,200 \
\hline \text { Other expenses } & 470 \
\hline
\end{array}$$ Ethan's accountant told him about contribution margin ratios,and Ethan understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and anything above that point was profit.
Ethan wishes to earn $5,000 of operating profit each month.Calculate the amount of sales revenue required to achieve the target profit.(Round your answer to the nearest dollar. )

Ethan Was a Professional Classical Guitar Player Until a Motorcycle