CA Inter P4 · Chapter 13 · Question 10 of 10
Method I of production has fixed costs of ₹3,00,000 and variable cost of ₹45 per unit. Method II has fixed costs of ₹4,80,000 and variable cost of ₹33 per unit. The cost indifference point is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 15,000 units
Explanation
At the indifference point, total costs are equal: 3,00,000 + 45x = 4,80,000 + 33x, so 12x = 1,80,000 and x = 15,000 units. Below this output Method I (lower fixed cost) is cheaper; above it Method II (lower variable cost) is cheaper.
More Marginal Costing MCQs
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