Location Break-even Analysis:

This method makes the cost-volume analysis to make an economic comparison of location alternatives. In this method the location providing lowest cost is found out by identifying fixed and variable costs and graphing them for each location. The three fundamental steps for locational break-even analysis are following:

a) Determine the fixed and variable cost for each location.

b) Plot the cost for each of location with annual volume on horizontal axis and costs on vertical axis.

c) Opt for the location that offers the lowest total cost for the expected production volume.