The maximum total variable cost always occurs at the cross point of Lines A and B,
e.g.,as shown in Figure 14-3.Line A is the variable carrying cost as a function of ordering quantity,Q.Line B is the variable ordering cost as a function of Q.

Question

Quizplus · Accepted Answer

The maximum total variable cost does not necessarily occur at the cross point of Lines A and B. The cross point typically represents the economic order quantity (EOQ) where the total costs (sum of variable carrying cost and variable ordering cost) are minimized, not maximized.

The Maximum Total Variable Cost Always Occurs at the Cross