Why is identification of a relevant range important?
A) Product costs are higher outside of the relevant range
B) Cost behavior outside of the relevant range is linear, which distorts CVP analysis.
C) It directly impacts the number of units of product a company must sell to be profitable.
D) It allows a company to rely on cost behavior for planning purposes.

Question

Quizplus · Accepted Answer

The relevant range is important because it is the range of activity within which the assumptions about cost behavior (fixed and variable costs) are valid. This allows a company to rely on these assumptions for accurate planning and decision-making.

Why Is Identification of a Relevant Range Important