A company's normal operating activity is to produce 500 units per month. During its first two months of operations, it produced 100 units per month. Following a great article about the product, product spiked to 1,000 units per month, but the spike only lasted for one month. Which of the following best approximates the company's relevant range?
A) 450 - 510 units
B) 100 - 1,000 units
C) 500 - 1,000 units
D) 100, 500, or 1,000 units

Question

Quizplus · Accepted Answer

The company's normal operating activity is to produce 500 units per month, so that is the center of the relevant range. The company produced 100 units per month for the first two months, which is significantly lower than the normal operating activity, so it can be considered outside the relevant range. The spike to 1,000 units per month for one month is also significantly higher than the normal operating activity, so it can also be considered outside the relevant range. Therefore, the best approximation for the company's relevant range is 450-510 units.

A Company's Normal Operating Activity Is to Produce 500 Units