A company's normal operating range, which excludes extremely high or low operating levels that are not likely to occur, is called the:
A) Relevant range.
B) High-low point.
C) Margin of safety.
D) Break-even point.
E) Contribution range.

Question

Quizplus · Accepted Answer

The relevant range is the range of activity within which a company expects to operate and generate revenue. It is typically characterized by a steady level of fixed costs and a linear relationship between variable costs and activity levels. This range excludes extremely high or low operating levels that are not likely to occur and is used as a basis for budgeting and decision-making.

A Company's Normal Operating Range, Which Excludes Extremely High or Low