Jakob Fletcher was a professional classical guitar player until his motorcycle accident that left him disabled.

Jakob Fletcher was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced 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

$1,210

Wages and benefits to maker of string instruments 

2,500

Other expenses

480

Jakob’s accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.65 went to cover his fixed costs, and that anything past that point was pure profit.

 Jakob wishes to earn $4,000 of operating profit each month. Calculate the number of guitars Jakob will have to sell to achieve the target profit.

Question 30 options:

39 guitars

33 guitars

15 guitars

18 guitars