What is the relevant range quizlet?

The relevant range is the range of activity over which a company expects to operate during the year.

What is the relevant range?

The relevant range is the range of activity (e.g., production or sales) over which these relationships are valid. For example, if the factory is operating at capacity, increasing production requires additional investment in fixed costs to expand the facility or to lease or build another factory.

Why is determination of a relevant range important quizlet?

Why is determination of a relevant range important? Cost behavior outside the relevant range may be distorted. vary in total directly and proportionately with changes in the activity level and remain the same per unit at every activity level.

How do you find the relevant range?

With variable costs then, the relevant range will be the range where the cost of adding one more, will be the same as the last. In this example, from 0-100 widgets, each additional widget will add $1 in cost to our direct materials. Once we go above 100, we are outside of the relevant range.

What is relevant range in CVP analysis?

One of the assumptions of CVP analysis is that costs will behave in the same manner within the relevant range. The relevant range represents the activity level where the company reasonably expects to operate during a particular period of time. It is also referred to as the normal or practical range.

What is relevant range and why is it important?

The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.

Which of the following best describes the term relevant range?

The correct answer to this question is c) The relevant range is the range of output over which cost assumptions are valid.

How does assuming that operating activity occurs within the relevant range affect cost volume profit analysis?

How does assuming that operating activity occurs within a relevant range affect cost-volume- profit analysis? By assuming a relevant range for operating activity, management can more justifiably assume either fixed or variable relations between costs and volume, and between revenue and volume.

When the level of activity decreases within the relevant range the fixed cost per unit will group of answer choices?

If the level of activity increases within the relevant range then the fixed cost per unit will decrease. If the level of activity increases within the relevant range then the total cost per unit will increase.

Which one of the following is a name for the range over which a company expects to operate?

The range over which a company expects to operate during a year is called the relevant range of the activity index. You just studied 53 terms!

What is the relevant range What role does the relevant range concept play in explaining how costs behave?

What role does the relevant-range concept play in explaining how costs behave? Relevant range: the band or range of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.

Why is relevant range important in cost estimation?

Identifying the relevant range when estimating costs is important because if a cost estimate is being made for activity outside of the relevant range, total fixed costs and per unit variable costs may be different from those described in the cost equation.

Why is relevance important in decision making?

A critical step in the decision-making process is identification of all the relevant information for each alternative. Relevant information is any information that would have an impact on the decision. Relevant information can come in the form of costs or revenues, or be nonfinancial in form.

Which of the following is true regarding the relevant range?

Answer: a) Total fixed costs will not change
Explanation: The relevant range is the level of activity wherein total fixed costs and variable cost… See full answer below.

How does the concept of relevant range relate to and impact fixed costs?

In accounting, the term relevant range usually refers to a normal range of volume or normal amount of activity in which the total amount of a company’s fixed costs will not change as the volume or amount of activity changes.

Why does cost behavior change outside the relevant range?

Cost behavior often changes outside of the relevant range of activity due to a change in the fixed costs. When volume increases to a certain point, more fixed costs will have to be added. When volume shrinks significantly, some fixed costs could be eliminated.

Why is relevant range important in cost estimation?

Identifying the relevant range when estimating costs is important because if a cost estimate is being made for activity outside of the relevant range, total fixed costs and per unit variable costs may be different from those described in the cost equation.

What is the relevant range What role does the relevant range concept play in explaining how costs behave?

What role does the relevant-range concept play in explaining how costs behave? Relevant range: the band or range of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.

Why is relevance important in decision making?

A critical step in the decision-making process is identification of all the relevant information for each alternative. Relevant information is any information that would have an impact on the decision. Relevant information can come in the form of costs or revenues, or be nonfinancial in form.