Use the information below to answer the following question(s).Big Island Coffee Co.produced and sold 120,000 units last year.Per unit revenue and costs were as follows:
Fixed manufacturing overhead and administrative salaries are fixed costs.The per unit amounts are based on last year's production.
-The relevant range is important because
A)it specifies which costs should be used for a given decision.
B)it provides a basis for determining a range of acceptable cost alternatives.
C)it is required to determine inventoriable costs under ASPE/IFRS.
D)it specifies the limits beyond which the relationship of cost to cost drivers may not be valid.
E)it determines the time horizon.

Question

Use the information below to answer the following question(s).Big Island Coffee Co.produced and sold 120,000 units last year.Per unit revenue and costs were as follows:
  Fixed manufacturing overhead and administrative salaries are fixed costs.The per unit amounts are based on last year's production.
-The relevant range is important because
A)it specifies which costs should be used for a given decision. 
B)it provides a basis for determining a range of acceptable cost alternatives. 
C)it is required to determine inventoriable costs under ASPE/IFRS. 
D)it specifies the limits beyond which the relationship of cost to cost drivers may not be valid. 
E)it determines the time horizon.

Quizplus · Accepted Answer

The relevant range specifies the limits beyond which the relationship of cost to cost drivers may not be valid. This means that the per unit amounts, such as revenue and costs, may not remain constant beyond certain production levels or activity levels. Understanding the relevant range is important for making accurate cost predictions and budgeting decisions. Options A, B, C, and E do not accurately describe the purpose of the relevant range.

Use the Information Below to Answer the Following Question(s)