The below Exhibit shows three potential locations for DC along with their fixed and variable costs (cost per unit). Denver has low fixed costs, perhaps due to low rent, but high variable costs, perhaps due to longer distance to key markets. Seattle has a middle level of both fixed and variable costs. Los Angeles has much higher fixed costs, perhaps due to highly automated facility, but very low variable costs, perhaps due to that automation and also proximity to customers. Note that the exhibit also lists maximum units, which is a best-case scenario annual forecast for this example. The fixed costs plus the variable costs times the maximum units results in a total cost estimated at that unit level.

City	Fixed Costs		Variable Costs		Maximum Units		Total Costs at Maximum Units
Denver	$2,000,000		$615		26,000		$17,990,000
Seattle	$4,000,000		$385		26,000		$14,010,000
Los Angeles	$8,000,000		$115		26,000		$10,990,000

Questions

1. Calculate the Crossover Point (volume in unit) for the following pairs:
   1. Denver-Seattle
   2. Seattle -Los Angeles
   3. Denver-Los Angeles

2. Using a graph (x axis = units in volume, and y axis = Cost in $) to elaborate:
   1. your above Crossover results; and
   2. under what scenario/volume, which city you will choose for your Distribution Center