Colin Was a Professional Classical Guitar Player Until His Motorcycle

question 39

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: $$\begin{array} { | l | r | } \hline \text { Rent and utilities } & \$ 1,000 \\\hline \text { Wages and benefits to luthier } & 2,500 \\\hline \text { Other expenses } & 481 \\\hline\end{array}$$ 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.
What is the amount of revenue Colin should earn each month to break even?

• A) $9,952
• B) $6,635
• C) $4,968
• D) $5,833

---

Definitions:

Organ of Corti

A structure located in the cochlea of the inner ear that contains hair cells responsible for converting sound vibrations into electrical signals for the brain to interpret as sound.

Cochlea

The snail-shaped portion of the inner ear.

Temporal Lobe

A region of the brain located on either side of the head above the ears, involved in processing auditory information and encoding memory.

Surgical Therapy

Medical treatment involving operations to repair, remove, or replace diseased parts of the body.