Rinki Ltd. has two divisions, A and B. Target profit of A is 100 lakh. A has capacity to produce 20,000 units of product P but only 15,000 units are…

CA Intermediate · Cost and Management Accounting · RTP · January 2026
Rinki Ltd. has two divisions, A and B. Target profit of A is 100 lakh. A has capacity to produce 20,000 units of product P but only 15,000 units are produced and sold in the market at 3,000 per unit. B received an order for which P would be required as input. B approaches A for purchase of 5000 units of P. What price should A charge from B per unit of P so as to meet its target profit? (Other details of A are: Fixed cost is 90 lakh; Variable cost per unit of P is 2,000)
(A) ₹ 3,000
(B) ₹ 2,800
(C) ₹ 2,500
(D) ₹ 2,000

Suggested Answer and Working Notes:

Correct Answer: Option (B)

₹ 2,800

Topics: Marginal Costing

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