Ajax was a professional classical guitarist until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (a maker o 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: Rent and utilities Wages and benefits to luthier Other expenses $700 $2,400 471 Ajax's accountant told him about contribution margin ratios, and Ajax understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and anything above that point was profit. How many guitars does Ajax need to sell each month to break even? (Round your answer up to the nearest whole guitar.) O A. 7 guitars O B. 3 guitars O C. 8 guitars O D. 6 guitars ...
Ajax was a professional classical guitarist until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (a maker o 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: Rent and utilities Wages and benefits to luthier Other expenses $700 $2,400 471 Ajax's accountant told him about contribution margin ratios, and Ajax understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and anything above that point was profit. How many guitars does Ajax need to sell each month to break even? (Round your answer up to the nearest whole guitar.) O A. 7 guitars O B. 3 guitars O C. 8 guitars O D. 6 guitars ...
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ajax was a professional classical guitarist until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (a 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:
Rent and utilities
Wages and benefits to luthier
Other expenses
$700
$2,400
471
Ajax's accountant told him about contribution margin ratios, and Ajax understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and
anything above that point was profit.
How many guitars does Ajax need to sell each month to break even? (Round your answer up to the nearest whole guitar.)
A. 7 guitars
B. 3 guitars
C. 8 guitars
D. 6 guitars
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