Explain the term “relevant range” and why it is important in estimating total costs?

Question

Question

Explain the term “relevant range” and why it is important in estimating total costs?

business accounting

Answer 1

Answer #1

Relevant range is generally referred as practical range.

Let's explain this with an example.

Iets suppose fixed cost is 20000 for one lakh units of production.

If units of production exceeds one lakh then fixed costs exceeds.so , the range of fixed cost is 20000 for one lakh units.

So , range helps us to estimate the cost at a particular activity in order to certain revenue and cost.

Answer 2

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