Answer to Question #236665 in Management for Janine De Bliek

Question

Discuss the three steps involved in locational break-even analysis

Answer 1

Step 1: collect data; this involves gathering financial data about fixed cost, variable cost, and average price

Step 2: plug in the collected data; it involves plotting cost for every location where cost is placed on the vertical axis and the annual volume of the horizontal axis of a graph.

Step 3: make adjustments by selecting a location with the lowest cost total cost to determine the expected volume of production.