INDIFFERENCE POINT

Costing

How is the formula of Indiff Point dervived? Change in FC = Change in Change in FC Change in VC Change in Contribution per unit Why is the VC/unit alternated with the Contribution/unit....The answer while calculating through Contribution per unit is not same as Change in VC per unit Calculatioon i have 2 questions how is indiff point formula dervived Why is the VC/unit alternated with the Contribution/unit....The answer while calculating through Contribution per unit is not same as Change in VC per unit Calculatioon

sriram kannan

CFA L1

★ 0

21-Jun-22 19:24

1K+

Answers (3)

Cost Indifference Point = Differential fixed cost/Differential variable cost per unit . Which illustration or material are you referring to

Sudha Reddy

CA Final

★ 20K+

22-Jun-22 10:11

Sudha Reddy

Cost Indifference Point = Differential fixed cost/Differential variable cost per unit . Which illustration or material are you referring to

How is the formula dervived

Thread Starter

sriram kannan

CFA L1

★ 0

23-Jun-22 16:47

Say fixed cost increases by Rs. 1,000 Variable cost reduces by Rs. 1 per unit. At 1,000 units both cost options would give the same cost. I.e. savings in variable cost will be off set by increase in fixed cost.

CA Suraj Lakhotia

Admin

23-Jun-22 19:41