Enter the differential fixed costs and the differential variables costs per unit into the calculator to determine the cost indifference point.

## Cost Indifference Point Formula

The following formula is used to calculate a cost indifference point.

CIP = DFC / DVCU
• Where CIP is the cost indifference point
• DFC is the differential fixed costs
• DVCU is the differential variable costs per unit

To calculate the Cost Indifference Point, divide the differential fixed costs by the differential variable costs per unit.

## What is a Cost Indifference Point?

Definition:

A Cost Indifference Point is a financial measure of the point at which to alternative investments are equal.

## How to calculate a Cost Indifference Point?

Example Problem:

The following example outlines how to calculate a Cost Indifference Point.

First, determine the differential fixed costs. In this example, the differential fixed costs are calculated to be $10,000.00. Next, determine the differential variable costs per unit. In this case, the differential variable costs per unit is equal to$500.00.

Finally, calculate the Cost Indifference Point using the formula above:

CIP = DFC / DVCU

CIP = 10,000 /500

CIP = 20 units