The theory states that total variable costs remain the same over a relevant range. 12,000 units; 4. True False. Question Explain the term relevant range and why it is important in estimating total cost. Relevant range is the range of activity within which cost behaviour assumptions are valid. Expenses can be classified into variable and fixed categories. Study with Quizlet and memorize flashcards containing terms like The term &39;relevant range&39; as used in cost accounting means the range over which, The portion of an asset that was consumed during a period is referred to as, As production increases what does variable cost do on a per-unit basis and more. In the other words, the relevant range of operations is the average volume of. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The relevant range is a. Costs are described as variable or fixed with respect to a particular relevant range. Apr 12, 2021 Within this relevant range of activities, the companys manufacturing operations run smoothly with the same amount or quantity of monthly fixed costs. Fixed Costs. a technique used to determine the fixed and variable portions of a mixed cost; it uses only the highest and lowest levels of activity within the relevant range. Find step-by-step Accounting solutions and your answer to the following textbook question Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) &92;beginarrayl r &92;textSales & &92;20,000&92;&92; &92;textVariable expenses & 12,000&92;&92; &92;hline &92;textContribution margin & 8,000. Total fixed cost is constant over the relevant range of activity. The production range that covers fixed but not variable costs. They will decrease as production decreases within the relevant range. it is a width or span of activities where the relationship of costs and the cost formula are valid, predictable and linear. Outside of that relevant range, revenues and expenses will likely differ from the expected amount. 50 Fixed administrative expense 2. Martinez Company&39;s relevant range of production is 7,500 units to 12,500 units. Adens Corporation&39;s relevant range of activity is 2,000 units to 6,000 units. It is the cost which is incurred even when output is zero. Which of the following costs do NOT change in total despite changes in volume within the relevant range A. Trong hot ng da trn chi ph, cc loi hot ng m cc gi nh chi ph hnh vi (chi ph c nh, chi ph hn hp, chi ph bin i) vn c. Within the relevant range, fixed costs remain constant, while variable costs change in direct proportion to the level of production or sales volume. Only the static budget matters. A more appropriate scale when rating importance in your questionnaire is Not at all important, Slightly Important, Important, Fairly Important, and Very Important, or numbering 0 to 5 as an interval scale. For example, if you are having a cookout, you'll need to figure out how much food to buy. levels of activity over which the company expects to operate. Revenues are linear. When it produces and sells 12,000 units, its unit costs are as follows Amount per Unit Direct materials 7. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Fixed costs. Which of the following statements about the relevant range is true Question 8 options Cost functions outside the relevant range are usually linear. How would total costs of personnel be classified a. ANSWER The Answer is OPTION B. , Jones Company has fixed costs totaling 48,000 per month, the variable cost per unit is 60, and selling price per unit is 100. A range of surviving period that a company could maintain it operation. It is the fundamental assumption for budgeting and costing exercises. Total variable costs are expected to vary in direct proportion with changes in volume. Which of the following is correct regarding a relevant range a. the measure of variability of the actual. The term "relevant range" is used to describethe range of activity where total variable cost remains unchanged as activity changes. Provide a clear definition for the following terms Incremental cost Opportunity cost Sunk cost. Sep 28, 2020 Relevant information is the predicted future costs and incomes that will differ among the alternatives relevant information (Horngren, et al, 2006). Revenues are linear. This document emphasizes the development of comprehensive range planning, which includes MAJCOM roadmaps and individual comprehensive range plans, based upon key investment areas. Learn the relationship between this ideal operation capacity and variable & fixed costs, and CVP analyses. The relevant range refers to the range of activity or production volume within which the assumptions about cost behavior and relationships are valid. The production range beyond the break-even. constant returns to scale over the relevant range of output D. Study with Quizlet and memorize flashcards containing terms like The term &39;relevant range&39; as used in cost accounting means the range over which, The portion of an asset that was consumed during a period is referred to as, As production increases what does variable cost do on a per-unit basis and more. With variable costs then, the relevant range will be the range where the cost of adding one more, will be the same as the last. Direct labor. Final answer. The relevant range is that range of activity where total variable costs and unit fixed costs are constant. over which production has occurred in the past 10 years. The smallest and the largest values from all estimates of the lower and upper limit of the effective scale space were used to define the relevant range. In these uncertain times, reliable statistical information becomes even more indispensable for effective policy responses and decisions, aiding countries to recover from different crises and. Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. Free Range Calculator - find the Range of a data set step-by-step. In other words, it&x27;s the range of production or sales volume where the total fixed costs remain constant, and the variable cost per unit stays the same. If production drops or increases, then the relevant range will change. 00 Direct labor . C) They will remain the same as production levels change within the relevant range. Variable costs and fixed costs. Direct labor 3. Fasheh Corporation's relevant range of activity is 7,000 units to 11,000 units. A company&39;s relevant range of production is 10,000 to 15,000 units. For example, if the factory is operating at capacity, increasing production requires additional investment in fixed costs to expand the facility or to lease or build another factory. (b) the range of activity in which fixed costs will be curvilinear. Thus, within the relevant range, the selling price per unit, variable cost per unit, and total fixed costs must be both known and stable. Estimates outside the relevant range are useful. variable cost B. When it produces and sells 20,000 units, its average costs per unit are as follows Average Cost per Unit Direct materials. A Solution The term relevant range as used in cost accounting means the range over which "Cost. Further, targeted management actions are needed at spatial scales that align with factors causing population change. can be estimated with reasonable accuracy. Cost functions outside the relevant range are usually linear. It sets the cost boundary in a certain activity level. 4,40012 52,800 2. A fixed cost within a relevant range d. From a decision-making standpoint, outside the relevant range, the cost-volume relationship will change. Relevant costs and fixed costs. It sets the cost boundary in a certain activity level. Dake Corporation's relevant range of activity is 2,000 units to 6,000 units. Costs are described as variable or fixed with respect to a particular relevant range. 500 units to 12,500 units. Study with Quizlet and memorize flashcards containing terms like Relevant Range, Variable. Find step-by-step Accounting solutions and your answer to the following textbook question Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units) &92;beginarrayl r &92;textSales & &92;20,000&92;&92; &92;textVariable expenses & 12,000&92;&92; &92;hline &92;textContribution margin & 8,000. Within the relevant range, the variable cost per unit A. In the equation Y a bX, Y is the . For example, assume that the students are going to lease vans from their universitys motor pool to drive to their conference. When it produces and sells 10,000 units, its average costs per unit are as follows Average Cost per Unit. 00 4. Relevant range is an accounting term that pertains to the minimum and maximum value. A company's relevant range of production is 10,000 to 15,000 units. Click the card to flip . Identification of relevant range is important because knowing the production level at which costs will change is critical for cost accounting, budgeting and financial planning. When analyzing cost behavior, we limit our analysis to the relevant range, but assumptions and conclusions may not necessarily extend beyond the range of activity outlined in the relevant range. 10 15. Study with Quizlet and memorize flashcards containing terms like J. Adens Corporation&39;s relevant range of activity is 2,000 units to 6,000 units. total costs are unchanged. It means that a fixed cost of 14 million will be incurred whether the company produces 0 units or 100,000 units. Final answer. remain constant in total within the relevant range of activity generally include rent and supervisor salaries should not be expressed on a per unit basis when making decisions A fixed cost, such as a long-term lease, that is difficult for a manager to change in the short-run is called a(n) fixed cost. Within the relevant range, cost behavior is predictable, and cost relationships are linear, making it easier to estimate costs and make decisions. Provide a clear definition for the following terms Incremental cost Opportunity cost Sunk cost. The relevant range will remain the same as long as prices do not change. A cost that is fixed per unit is an example of a A. Relevant range is the range of activity within which cost behaviour assumptions are valid. False; The cost-volume-profit analysis assumes that selling price, variable cost per unit, and total fixed costs fluctuate through the relevant range. Outside of that relevant range, revenues and expenses will likely differ from the expected amount. remains constant as activity changes. Martinez Companys relevant range of production is 7,500 units to 12,500 units. Here are some of the decisions you might make that relevant cost could inform Time to develop. Learn the relationship between this ideal operation capacity and variable & fixed costs, and CVP analyses. sunk costs. Fixed costs that may be avoided in the future are referred to as a. the range in which costs remain variable. exhibit decreasing marginal cost patterns. The relevant range of activity is the one in which the assumption that cost behavior is a straight line (linear) is reasonable. The relevant range is the range of activity for which assumptions about the company's cost. a) The relevant range refers to the range of fixed costs present in an organization. fixed and variable costs per unit will remain the same. Subtract the smallest number in your data set from the largest number. The relevant range is the normal length of time in a company's accounting period. 2717 Answers. Accounting questions and answers. Accounting questions and answers. Step fixed cost is the cost that remains fixed till a. The following angles were used to derive. Relevant Range The relevant range is the range of activity (e. 50 Fixed manufacturing overhead 5. Relevant range is the level of activity where operation costs are consistent over time. True False. 00 direct labor 3. Because the historical data used to create these equations for Bikes Unlimited ranges from a low of 2,900 units in January to a high of 5,900 units in April. 1 30. It is also referred to as the normal or practical. What is relevant range, and how can costs behave within this range Explain. When costs are estimated for a specific level of activity, the assumption is that. Costs are described as relevant or irrelevant with respect to a particular relevant range. When it produces and sells 4,000 units, its average costs per unit are as follows Average Cost per Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions. the range of activity where a particular relationship between fixed and variable costs stays valid. Question Explain the term relevant range and why it is important in estimating total cost. Additionally, cost-volume-profit analysis2 assumes that the number of units. Alexander claims that the relevant range concept is important only for variable costs. Which of the following statements about the relevant range is true A. 30 Direct labor2. They can be either variable or fixed, depending on the. Question. can be expected to change radically. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. 80 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed. Relevant range is the range of activity within which cost behaviour assumptions are valid. Question Martinez Company&39;s relevant range of production is 7. 7,200 units; 2. ) Variable costs per unit per unit LINK TO TEXT Indicate the fixed cost. However, if volume were to triple, there would likely be more fixed costs as the company will need more space and managers. Question Kubin Company&39;s relevant range of production is 18,000 to 22,000 units. Kubin Companys relevant range of production is 29,000 to 33,000 units. The relevant range for total production costs at Bikes Unlimited is shown in Figure 5. The relevant range is the normal length of time in a company's accounting period. Examples include a cost function for use of a telephone line where the terms are a fixed charge of 10,000 per year plus a 2 per minute charge for phone use. For example, in the current case, the fixed costs will be the student sales fee of 100. Step-fixed cost is the cost of the pizza, it is sold by the box, there is no partial pizza to be sold. A variable cost is a cost which varies. The following cost data represents average cost per unit for 15,000 units of production. Accounting Auditing Cost Accounting Financial Accounting Internal Audit. 50, direct labor is dollar 4 and fixed manufacturing overhead is dollar 5. The two components of a mixed cost are. Question 1 The relevant range is important because a) CVP assumptions are not valid when operations are in the relevant range b) Operations cannot be in any other range c) Fixed and variable costs may change outside the relevant range d) It describes the limits of operations Question 2 Once a firm reaches the breakeven point, the next unit sold will increase profit by an amount equal to the. increase or decrease in discrete steps. accounting. 50 Variable manufacturing. Fixed cost, variable cost and mixed cost are three classes into which costs are classified based on their behavior. 50 Fixed administrative. relevant range definition. Martinez Company's relevant range of production is 7. 00 Variable manufacturing overhead 1. 00 found here httpsbit. Learn how to calculate relevant range, its relation to fixed and variable costs, and its examples with tables and graphs. Perteet Corporation's relevant range of activity is 5,400 units to 11,000 units. The theory states that total variable costs remain the same over a relevant range. (a) True (b) False. Relevant range the band or range of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question. approximate a straight line within the relevant range b. The relevant range is the anticipated production activity level. y l ngha ting Vit ca thut ng Relevant range of activity - mt thut ng c s dng trong lnh vc kinh doanh. 80 Variable manufacturing overhead 2. The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. When volume increases to a certain point, more fixed costs will have to be added. The relevant range of operations fixed or variable costs CVP analysis requires management to classify costs as either fixed or variable with respect to production or sales volume, within the relevant range of operations. 15-1 (scope) of ASC 820-10 (Fair Value Measurement). Relevant Range The relevant range is the range of activity (e. com member to unlock this answer Create your. are not addressed correctly by any of the answer; One of the major assumptions limiting the reliability of breakeven analysis is that A. The term "relevant range" as used in cost accounting means the range over which a. Past costs may help you predict and estimate the future costs, but the past costs are otherwise irrelevant to the decision. When is produces and sells 9,000 units, its average costs per unit are as follows If the selling price is 24. Answer A LO 3 Type RC. The range of activity over which the changes in the cost are of interest to management is called the relevant range. 20 Variable manufacturing overhead 1. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. levels of activity over which the company expects to operate. Fixed costs are those costs that will not change within a given range of production. The investment areas provide the foundation for supporting a relevant range and a mechanism to articulate range and airspace requirements. 40 3. mixed costs. are not addressed correctly by any of the answer; One of the major assumptions limiting the reliability of breakeven analysis is that A. Apr 26, 2023 Variable Cost A variable cost is a corporate expense that changes in proportion with production output. Jun 18, 2021 Relevant range the band or range of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question. Trong hot ng da trn chi ph, cc loi hot ng m cc gi nh chi ph hnh vi (chi ph c nh, chi ph hn hp, chi ph bin i) vn c. The relevant range will remain the same as long as prices do not change. Estimates outside the relevant range are useful. 00 Sales commissions 1. When it produces and sells 12,000 units, its unit costs are as follows Amount per Unit Direct materials 8. 125H is a motor bike manufacturer. The relevant range is the range of activity over which a company expects to operate during the year. April 18,000 12,000. Relevant range is the range of activity within which cost behaviour assumptions are valid. fixed costs per unit will change and variable. Which of the. For example, if they must hire a second supervisor in order to produce 12,000 units, they must go back and adjust the total fixed costs used in the equation. BUS 121. 05 Direct labor 3. The relevant range is the normal length of time in a company&39;s accounting period. Study with Quizlet and memorize flashcards containing terms like what assumption(s) are frequently made when estimating a cost function a) cost behavior is approximated by a linear function within the relevant range. avoidable costs B. BUS 121. b) The relevant range pertains to a single unit of product. For example, if the factory is operating at capacity, increasing production requires additional investment in fixed costs to expand the facility or to lease or build another factory. Study with Quizlet and memorize flashcards containing terms like 22) Which of the following statements is TRUE with respect to variable costs per unit A) They will decrease as production increases within the relevant range. The relevant range refers to the range of activity or production levels within which a company operates and where its cost structure remains consistent. Sandhill Enterprises is considering manufacturing a new product. What is relevant range The relevant range is the band of normal activity level (e. activity level where all costs are curvilinear c. Sales mix will be constant. The relevant range is the range of. 80 Fixed. ANSWER The Answer is OPTION B. Final answer. The relevant range, the range of activity for which cost estimates are more likely to be accurate, is from 150 units (lowest activity level) to 450 units of production (highest activity level). Direct materials. What does the term "relevant range" mean The range within which the relevant costs are incurred. Fixed cost, variable cost and mixed cost are three classes into which costs are classified based on their behavior. &226;y l&224; ngha ting Vit ca thut ng Relevant range of activity - mt thut ng c s dng trong lnh vc kinh doanh. variable costs per unit are constant and fixed costs per unit fluctuate. When it produces and sells 10,000 units, its average costs per unit are as follows Average Cost per Unit. &39;s claim, "The relevant range is indispensable in cost behavior analysis. Cost functions outside the relevant range are usually linear. An example is the speed of light 'c' (186,200milessec. The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Question 1 The relevant range is important because a) CVP assumptions are not valid when operations are in the relevant range b) Operations cannot be in any other range c) Fixed and variable costs may change outside the relevant range d) It describes the limits of operations Question 2 Once a firm reaches the breakeven point, the next unit sold will. Calculate the variable cost per unit within the relevant range. a firm&39;s range of activity Simplifying assumptions identified for the use of cost behavior pattern data include fixed activity and linearity. The relevant range of activity refers to the a. The relevant range is the number of units that can be producedsoldused under normal circumstances. Which of the following statements is correct about relevant range Multiple Choice The relevant range is inetul for operations managers, but not necessary for cost managers within a production facility The relevant range helps managers make decisions based on normal operations, but the relevant range is not prescriptive beyond the range The relevant range only applies to fixed costs in the. 50 Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense 2. The relevant cost range for a barrel of oil has been increasing dramatically thanks to the US Biden administrations policies and. 00 Fixed selling expense 0. mlive bay city sports, yard sales myrtle beach
Costs are unchanged. . Relevant range
The relevant range is the normal length of time in a company s accounting period. Definition The relevant range of operations is the normal or average scope of business activities. Round dollar. 50 Fixed manufacturing overhead 5. The two components of a mixed cost are. Managerial accountants like to assume that the relationship between a cost and an. The idea behind identifying a relevant range is to allow. Investment in new more productive equipment results in higher fixed costs, but may result in lower total and per unit variable costs. A Solution The term relevant range as used in cost accounting means the range over which "Cost. Step-fixed cost is the cost of the pizza, it is sold by the box, there is no partial pizza to be sold. 25 Direct labor 5. The relevant range for total production costs at Bikes Unlimited is shown in Figure 5. Fixed costs are those costs that will not change within a given range of production. When it produces and sells 4,400 units, its average costs per unit are as follows Average Cost per Unit 6. Final answer. Indirect labor. 720,000 B. It is the fundamental assumption for budgeting and costing exercises. When volume shrinks significantly, some fixed costs could. Martinez Company&39;s relevant range of production is 7,500 units to 12,500 units. is between 120,000 units and 190,000 units per month. The relevant range refers to the range of activity or production levels within which a company operates and where its cost structure remains consistent. Sep 28, 2020 Relevant information is the predicted future costs and incomes that will differ among the alternatives relevant information (Horngren, et al, 2006). The variable, fixed, and mixed costs. Within the designated boundaries, certain revenue or expense levels can be expected to occur. 00 12. 55 Direct labor 4. True b. Cost-volume-profit analysis assumes all of the following EXCEPT A) all costs are variable or fixed. 50 3. Now that you've identified the smallest and largest numbers in the set, all you have to do is subtract them from each other. In other words, it is the range in which a company's fixed and variable costs remain constant per unit, and the cost behavior patterns are predictable. 85 Direct labor 2. The per unit fixed cost increases with an increase in the level of output. When it produces and sells 10,000 units, its average costs per unit are as follows Direct materials5. They will decrease as production increases within the relevant range b. What is relevant range, and how can costs behave within this range Explain. 50 Fixed manufacturing overhead 5. Jan 29, 2021 Relevant cost is a managerial accounting term that describes avoidable costs that are incurred when making business decisions. Martinez Companys relevant range of production is 7,500 units to 12,500 units. 90 1. Learning Outcomes Describe the relevant range and its use in managerial accounting The Relevant Range (Cost Accounting Tutorial 4) Watch on SPEAKER Hey, guys, Dave here. Now that you've identified the smallest and largest numbers in the set, all you have to do is subtract them from each other. The relevant range pertains to fixed costs not variable costs. 1)Justification for correct answerRelevant range is said to be an activity that is bound with a minimum and a maximum amount within the relevant rang. Click the card to flip . A limitation of activity-based costing is that it can be expensive to use. produced, within the relevant range. Examples include a cost function for use of a telephone line where the terms are a fixed charge of 10,000 per year plus a 2 per minute charge for phone use. Question Martinez Companys relevant range of production is 7,500 units to 12,500 units. Increasing in total over the relevant range. 80 Variable manufacturing overhead1. cost relationships are valid. Johanna Kuvalis Verified Expert. Question Kubin Company's relevant range of production is 18,000 to 22,000 units. The range might be number of widgets produced, number of supervisory hours or some other indicator of activity. This applies to fixed costs as well as variable costs that may be averaged for the period of time under consideration. vary in total in direct proportion to changes in the activity level. manufactures memory chips for electronic toys within a relevant range of 61,600 to 100,800 memory chips per year. ANSWER Relevant Range The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Businesses use relevant costs in management accounting to conclude whether a new decision. When it produces and sells 14,000 units, its average costs per unit are as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense. geographical areas where the company plans to operate. Advantages of the method of least squares over the high-low method include all of the following EXCEPT. When it produces and sells 10,000 units, its average costs per unit are as follows Average Cost Per Unit Direct materials 5. Accounting questions and answers. Which of the following statements about the relevant range is true A. Variable costs and fixed costs. A range where relevant cost incurred. , In managerial accounting, the term "relevant range" is often used to describe A. a causal factor that increases the total cost of a cost objective. It is up to the cost accountant to determine the relevant range and make clear to management that estimates being made for activity outside of the relevant range must be analyzed carefully for accuracy. Variable cost per unit, within the relevant range, will. 60 Direct labor 3. Within the designated boundaries, certain revenue or cost levels can be expected to occur. Usually used in describing fixed costs. Fixed selling expense 3. b) variable costs per unit are constant and fixed costs per unit fluctuate c) both total variable costs and total fixed costs are constant. THE LINEARITY ASSUMPTION AND THE RELEVANT Management accountants ordinarily assume that costs are strictly linear 1. Costs that are always relevant in decision-making are A. Alexander claims that the relevant range concept is important only for variable costs. Direct labor. Normally, sunk costs and future costs (not changing with alternatives under consideration) are irrelevant costs. true tf The range of activity over which changes in cost are of interest to management is called the relevant range. The relevant range is that range of activity for which the assumptions with regards to the cost behavior of a company remains valid. Direct labor. In other words, fixed costs remain fixed in total over the relevant range and variable costs remain fixed on a per-unit basis. Fixed costs in total vary in direct proportion to changes in output within the relevant range. behavior b. Final answer. 50 per hour. Learn how to calculate relevant range and see examples of relevant range in different business forms. Relevant Range The relevant range is the range of activity (e. It is expressed in the same units as the data. a) The relevant range refers to the range of fixed costs present in an organization. It is the fundamental assumption for budgeting and costing exercises. 00 Sales commissions 1. When it produces and sells 12,000 units, its unit costs are as follows Amount per Unit Direct materials 7. The relevant range is the band of normal activity level or volume in which there is an abnormal relationship between the level of activity or volume and the variable cost per unit. fixed and variable costs per unit will change. 30 Direct labor 5. Costs that are always relevant in decision-making are A. Question added by Hany Sabry , Finance Manager , GMC for Engineering &. Total fixed costs will not change c. Click the card to flip . Total fixed costs will not change c. Provide a clear definition for the following terms Incremental cost Opportunity cost Sunk cost. What is still 'at large' is what it is. With variable costs then, the relevant range will be the range where the cost of adding one more, will be the same as the last. A statistical method is used to mathematically derive the cost function. It projects the cost of direct materials and rent for a range of output as shown below. 50, Fixed Manufacturing overhead 4. May 22, 2019 Such limits constitute relevant range. Kubin Companys relevant range of production is 29,000 to 33,000 units. Relevant information is the predicted future costs and incomes that will differ among the alternatives relevant information (Horngren, et al, 2006). Study with Quizlet and memorize flashcards containing terms like CVP analysis assumes which of the following for the relevant range, monthly rent on a factory building is. Question 11 Why is identification of a relevant range important in CVP analysis Select one a. Only two points are used to develop the cost function. Past costs may help you predict and estimate the future costs, but the past costs are otherwise irrelevant to the decision. Businesses use relevant costs in management accounting to conclude whether a new decision. 225,000 D. increase on a per unit basis as the activity level increases. Within the relevant range, if there is a change in the level of the cost driver then. In that range the total of the two fixed costs is 1,400,000 per year. Question 1 The relevant range is important because a) CVP assumptions are not valid when operations are in the relevant range b) Operations cannot be in any other range c) Fixed and variable costs may change outside the relevant range d) It describes the limits of operations Question 2 Once a firm reaches the breakeven point, the next unit sold will increase profit by an amount equal to the. The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Fixed costs are those costs that will not change within a given range of production. Normally, sunk costs and future costs (not changing with alternatives under consideration) are irrelevant costs. . jdownloader full 2022