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Found in: Page 1119

Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

What is the relevant range?

The range where the variable cost per unit and fixed cost remains constant is known as the relevant range.

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Meaning of relevant range

The relevant range refers to the range in which adding new unit will does not bring change in variable cost and fixed cost per unit.

Example of the relevant range

Suppose a company wants to produce 100 pens. The costs related to production are as follows:

 Number of pens produced Fixed cost Variable cost 0-50 $1,000$0.25 per unit 51-100 $1,500$0.45 per unit 101-150 $2,000$0.60

Therefore, the relevant cost in the given example is 51-100 pens.