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    Washburn Guitars: Using Break-Even Points

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    In Washburn's factory, what is the break-even point for the new line of guitars if the retail price is $349?

    Using Washburn guitars, explain shifting the demand curve versus moving along the demand curve.

    Discuss the factors that affect the demand for Washburn guitars.

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    Solution Preview

    Break-Even and Demand Analysis:

    Break-even point for the new line of guitars if the retail price is $349
    To determine the break-even output for the line of guitars, information that include the fixed operating cost and the variable cost per unit are needed. The formula that may be used to compute the break-even output is as follows:
    QB = F/ (P - V) (Keown et al., 2002)
    Where QB = Break-even output
    P =unit sales price
    F = fixed operating cost
    V = the unit variable cost
    Hence, in the case at hand, to compute the break- even output, variable cost per unit (V) and fixed operating cost (F) must be provided.
    On the assumption that Fixed operating ...

    Solution Summary

    This solution provides steps to determine the break-even point for the new line of guitars.

    $2.19

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