Brad 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: $$\begin{array} { | l | r | }
\hline \text { Rent and utilities } & \$ 810 \
\hline \text { Wages and benefits to luthier } & 2,520 \
\hline \text { Other expenses } & 480 \
\hline
\end{array}$$ Brad's accountant told him about contribution margin ratios,and Brad understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and anything above that point was profit.
Brad 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

Brad 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: $$\begin{array} { | l | r | } 
\hline \text { Rent and utilities } & \$ 810 \
\hline \text { Wages and benefits to luthier } & 2,520 \
\hline \text { Other expenses } & 480 \
\hline
\end{array}$$ Brad's accountant told him about contribution margin ratios,and Brad understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and anything above that point was profit.
Brad 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 Brad 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: $$\begin{array} { | l | r | } 
\hline \text { Rent and utilities } & \$ 810 \
\hline \text { Wages and benefits to luthier } & 2,520 \
\hline \text { Other expenses } & 480 \
\hline
\end{array}$$ Brad's accountant told him about contribution margin ratios,and Brad understood clearly that for every dollar of sales,$0.60 went to cover his fixed costs,and anything above that point was profit.
Brad 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. )

Brad Was a Professional Classical Guitar Player Until a Motorcycle