 Now, let's look at an example, first example of breakeven analysis for location selection. Problem statement is there is a C and A electronic. It is considering two possible sites for its new DVD plant. The annual fixed cost and variable cost for each site are given as location is Lexington and the fixed cost is $650,000, variable cost is $50 per unit and Wilmore which has a fixed cost of $350,000 and a variable cost of $65 per unit. If the annual demand is $25,000, which is the best location with fixed and variable cost and the sale forecast, depending upon number of units is the fixed cost and variable cost both are included and this is happening for Lexington and we see that breakeven point is $20,000. If we take this in calculation, we have to identify the range of output for which each location gives you the lowest cost. If we do not make any unit, we get $650,000 for Lexington and $350,000 for Wilmore. How did this happen? $650,000 is fixed cost for Lexington whereas $350,000 is fixed cost for Wilmore and fixed cost we have to incur even though we do not produce anything. So that means from $0,000 to $2,000 which is our breakeven according to these two locations, our location will give a minimum cost and $2,000 and above the other location will give a minimum cost. So in this case, if quantity is less than $20,000 then Wilmore, because the minimum cost of Wilmore is $0,000 to $2,000, Wilmore is feasible whereas above $20,000, Lexington is feasible. Now if we look at this, our sale forecast is basically $25,000. We will say $25,000 whereas $20,000 is the breakeven. That means the queue is greater than your breakeven point of $20,000. At this point, which location is providing the minimum cost? That is Lexington. Lexington is providing the sale forecast of $20,000 above and here we have the sale forecast of $25,000. So we will opt for Lexington and not Wilmore.