Craft,Inc.normally produces between 120,000 and 150,000 units each year.Producing more than 150,000 units alters the company's cost structure.For example,fixed costs increase because more space must be rented,and additional supervisors must be hired.The production range between 120,000 and 150,000 is called the:
A) differential range.
B) median range.
C) relevant range.
D) leverage range.

Question

Quizplus · Accepted Answer

The relevant range is the production range in which a company's costs and revenue behavior are predictable and consistent. In this case, it is between 120,000 and 150,000 units for Craft, Inc. This means that the company's cost structure, including fixed costs, is stable and can be estimated within this range. Anything outside of this range can result in increased or decreased costs and revenue, making it an irrelevant range for cost analysis and decision-making. Therefore, the relevant range is the most important range for Craft, Inc. to consider.

Craft,IncNormally Produces Between 120,000 and 150,000 Units Each Year