Review this brief overview of Location Cost-Volume-Profit Analysis, which should help you to understand the financial aspects of choosing a location. In addition consider the factors that influences the location of a new facility. This is important because a poor choice can make it very difficult to meet demand and manage costs effectively.
Location Cost-Volume-Profit Analysis:
The Cost-Volume-Profit (CVP) Analysis can be represented either mathematically or graphically. It involves three steps:
Additionally, there are four assumptions one must keep in mind when using this method:
Total cost = FC + v(Q), where FC=Fixed Cost, v=Variable Cost per Unit, Q=Number of Units.
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