Colin Was a Professional Classical Guitar Player Until His Motorcycle

question 37

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: $$\begin{array} { | l | r | } \hline \text { Rent and utilities } & \$ 1,210 \\\hline \text { Wages and benefits to luthier } & 2,500 \\\hline \text { Other expenses } & 481 \\\hline\end{array}$$ Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.75 went to cover his fixed costs, and that anything past that point was pure profit.
Colin wishes to earn $5,100 of operating profit each month. Calculate the amount of sales revenue required to achieve the target profit.

• A) $37,164
• B) $9,054
• C) $12,388
• D) $10,133

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Definitions:

Marascuilo Procedure

A multiple comparison procedure that can be used to test for a significant difference between pairs of population proportions. This test can be helpful in identifying differences between pairs of population proportions whenever the hypothesis of equal population proportions has been rejected.

Population Proportions

The ratio of individuals in a population who possess a certain attribute to the total population.

Expected Frequency

In statistics, the forecasted count of occurrences across different categories or intervals in a study.

Significant Change

A statistically important difference or alteration between two or more variables or sets, indicating a divergence beyond random variations.