Question: Why is identification of a relevant range important? Cost behavior outside of the relevant range is linear, which distorts CVP analysis. Product costs are higher
Why is identification of a relevant range important?
Cost behavior outside of the relevant range is linear, which distorts CVP analysis.
Product costs are higher outside of the relevant range.
It directly impacts the number of units of product a company must sell to be profitable.
It allows a company to rely on cost behavior for planning purposes.
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