Colin Was a Professional Classical Guitar Player Until His Motorcycle

question 76

Multiple Choice

Colin 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 $700 and the fixed monthly operating costs are as follows: Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and that anything past that point was pure profit. Colin is planning to increase the selling price to $820. What impact will the increase in selling price have on the breakeven point in units?

• A)It will stay the same.
• B)It will go down from 11 to 9 units.
• C)It will go up from 9 to 12 units.
• D)It will go down from 9 to 7 units.

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Definitions:

Calcium

A chemical element essential for living organisms, primarily in bone formation and maintenance, blood clotting, and muscle function.

Polyuria

The production of abnormally large volumes of dilute urine, which can be a sign of various medical conditions.

Glycosuria

The presence of glucose in the urine, typically an indicator of high blood sugar levels.

Sugar

A sweet-tasting, soluble carbohydrate, present in many plants, primarily sugar cane and sugar beets, and used extensively as a sweetener and preservative.