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The relevant range is indispensable in cost behavior analysis." Is this true? Why or why not?

The relevant range is indispensable in cost behavior analysis." Is this true? Why or why not?

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Answer #1

Yes , this is true Relevant range is indispensable in cost behaviour analysis

Cost behavior analysis is the study of how specific costs respond to changes in the level of activity within a company.

Relevant range usually refers to a normal range of volume or normal amount of activity in which the total amount of a company's fixed costs will not change as the volume or amount of activity changes.Relevant range is important because most companies operate within the relevant range. As within range, it is possible to establish a linear relationship for both variable and fixed costs. If a relevant range cannot be established, segregation of fixed cost and variable cost become extremely difficult .

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