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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?
Crime
An act prohibited by the state; a public wrong.
Exclusive Dealing
A contractual agreement where one party agrees to buy goods exclusively from another, often restricting competition.
Distributor
A person or company that is responsible for supplying goods to retailers or directly to customers.
Manufacturer
A person or company that makes goods for sale, especially on a large scale.
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