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Washburn Guitars: Using Break Even Points to Make Pricing Decisions

Washburn Guitar manufactures instruments in four categories—one-of-a-kind, batch custom, mass customized, and mass produced—and must set prices in each category that enable it to stay in business. Bill Abel, Washburn’s VP of sales, is responsible for setting the prices for the firm’s guitar lines. Looking at a new line whose suggested retail price is $349, Abel estimates elements of Washburn’s fixed and variable costs to project the likely break-even point and profit. You should calculate break-even points and profits under various conditions and assess the effects of moving two