Colin was a professional classical guitar player until his motorcycle accident that left him disabled. After long months oftherapy, he hired an experienced luthier(maker of stringedinstruments) and started a small shop to make and sell Spanish guitars. The guitars sell for$700 and the fixed monthly operating costs are asfollows:
| Rent and utilities |
$800 |
| Wages and benefits to luthier |
2,500 |
| Other expenses |
480 |
Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar ofsales, $0.60 went to cover his fixedcosts, 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 inunits?
A. It will stay the same.
B. It will go up from 9 to 12 units.
C. It will go down from 9 to 7 units.
D. It will go down from 11 to 9 units.