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CMA Intermediate · Management Accounting · Marginal Costing (Management Accounting)

Nair Chemicals sells 2 products, X and Y, in a fixed mix of 3 units of X to 2 units of Y. X sells at ₹40 with variable cost ₹30; Y sells at ₹60 with variable cost ₹40. Fixed costs are ₹1,40,000. What is the break-even quantity of Y?

The break-even quantity of Y is 4,000 units. Each package of 3 X and 2 Y gives ₹70 contribution, so ₹1,40,000 of fixed costs needs 2,000 packages, which means 4,000 units of Y and 6,000 units of X.

  1. A14,000 units
  2. B5,600 unitsCorrect
  3. C7,000 units
  4. D8,400 units

Explanation

Contribution: X = ₹10, Y = ₹20. A mix package of 3X + 2Y gives 30 + 40 = ₹70. Packages = 1,40,000 / 70 = 2,000. Y = 2,000 x 2 = 4,000 units, and X = 6,000 units. Check: 6,000x10 + 4,000x20 = 1,40,000.

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