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11 Οκτ 2024 · The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain or levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.
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- Operation Costing Definition
The relevant range of operations is the normal operating range for a business, with existing machinery. On a per unit basis, as the level of production changes the fixed cost per unit of output decreases as volume increases (and vice versa).
3 Αυγ 2018 · When looking at costs and how costs behave, relevant range is the range of output or production in which our assumptions are true. If you move outside the relevant range, your cost assumptions are no longer valid.
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.
The relevant range is essential for analyzing cost behavior and making informed managerial decisions regarding production and budgeting. In joint cost allocation, recognizing the relevant range helps determine how costs should be distributed among multiple products produced simultaneously.
22 Μαΐ 2019 · In cost behavior analysis, relevant range represents the production bracket expressed in terms of units within which fixed costs are indeed fixed. We define fixed costs as costs which do not change with increase or decrease in the number of units produced.
22 Μαΐ 2024 · The relevant range is the range of activity where the assumption that cost behavior is a straight line (linear) is reasonably valid. Managerial accountants like to assume that the relationship between a cost and an activity run in a straight line.
