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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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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.
12 Μαΐ 2024 · Relevant Range in accounting refers to the range of activities of a company within which specific cost behavior is not altered. It means the limit of production or other related activities within which the organization maintains the same level of costs.
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.
22 Μαΐ 2019 · Relevant Range 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.
The relevant range is the span of activity within which fixed and variable cost behaviors remain consistent. It is crucial for managers to understand this range because outside of it, the costs may not behave as expected, leading to misleading financial decisions.
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 If you move outside the relevant range, your cost assumptions are no longer valid.
