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Steven Was a Professional Classical Guitar Player Until His Motorcycle

Question 67

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Steven was a professional classical guitar player until his motorcycle accident that left him disabled.After long months of therapy,he hired an experienced luthier (maker of stringed instruments) and started a small shop to make and sell Spanish guitars.The guitars sell for $800 and the fixed monthly operating costs are as follows:  Rent and utilities $1,250 Wages and benefits to luthier 2,500 Other expenses 490\begin{array} { | l | r | } \hline \text { Rent and utilities } & \$ 1,250 \\\hline \text { Wages and benefits to luthier } & 2,500 \\\hline \text { Other expenses } & 490 \\\hline\end{array} Steven's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales,$0.65 went to cover his fixed costs,and that anything past that point was pure profit.
Steven wishes to earn $6,000 of operating profit each month.Calculate the number of guitars Steven will have to sell to achieve the target profit.


A) 19 guitars
B) 37 guitars
C) 9 guitars
D) 20 guitars

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