Hisham Was a Professional Classical Guitar Player Until a Motorcycle

question 129

Multiple Choice

Hisham was a professional classical guitar player until a motorcycle accident left him disabled.After long months of therapy,he hired an experienced luthier and started a small shop to make and sell Spanish guitars.The guitars sell for $900,and the fixed monthly operating costs are as follows: $$\begin{array} { | l | r | } \hline \text { Rent and utilities } & \$ 800 \\\hline \text { Wages and benefits to luthier } & 2,000 \\\hline \text { Other expenses } & 474 \\\hline\end{array}$$ Hisham's accountant told him about contribution margin ratios,and Hisham understood clearly that for every dollar of sales,$0.65 went to cover his fixed costs,and anything above that point was profit.
Hisham wishes to earn $4,000 of operating profit each month.Calculate the number of guitars Hisham will need to sell to achieve the target profit.(Round your answer up to the nearest whole guitar. )

• A)3 guitars
• B)12 guitars
• C)4 guitars
• D)13 guitars

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