Within the relevant range a valid argument can be made for the assumption of linearity of variable costs.

Question

Quizplus · Accepted Answer

Within the relevant range, the assumption of linearity of variable costs holds true. This means that the total variable cost will increase in a linear pattern as the level of production or sales increases within a certain range. However, the assumption may not hold true outside of the relevant range as there may be other factors that may cause the variable costs to change non-linearly.

Within the Relevant Range a Valid Argument Can Be Made