Colin Was a Professional Classical Guitar Player Until His Motorcycle

question 73

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:

Ear

The organ of hearing and equilibrium that detects sound waves and helps in maintaining balance.

Nose

The part of the human face or the forward part of the head of other vertebrates that includes the nostrils and is the primary organ for smelling and breathing.

Abdomen Rounded

A physical characteristic where the abdomen appears bulging or spherical, which can indicate various medical conditions or normal physiological variations.

Drum-like Sounds

Acoustic phenomena, often related to medical examinations, where sounds resemble that of a drum, typically suggesting the presence of air in a body cavity.