Relevant Range and Cost Behavior Analysis

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  A) the level of activity must remain constant over the relevant range B) the total fixed costs remain constant over the relevant range C) total variable cost remain constant over the relevant range D) cost behavior can change as long as total cost

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  Relevant range is important because it is relevant to the CVP analysis because the behavior of costs is assumed to be linear in the relevant range. 3.

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  Please diagram the behavior of each cost within the relevant range assuming the behavior is linear. 3. For Hunt Company, a mixed cost is $15,000 plus $18 per direct labor hour.

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  464619 Mixed Cost Analysis and the Relevant Range The Ramon Company is a manufacturer that is interested in developing a cost formula to estimate the fixed and variable components of its monthly manufacturing overhead costs.

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  396860 Range of activity for deciding cost behavior Why is it necessary for a company to specify a relevant range of activity when making assumptions about cost behavior?

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  The key assumptions underlying the CVP analysis are 1. The analysis is valid over a given range of output called the relevant range 2. All costs can be segregated into fixed and variable costs.

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  The three most common cost behavior classifications are _________. fixed costs, variable costs, and mixed costs 2.

• This posting addresses cause and effect vs. correlation.

  Cost behavior is approximated by a linear cost function with in a relevant range (relevant range is the range of the activity in which there is a relationship between total cost and level of activity. How would you answer the problem?

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  Relevant range refers to the activity range over which the cost behavior is stable. A fixed cost would remain the same in totality and the variable cost will remain the same on a per unit basis.