Relevant range
Relevant range is the span of activity volume over which a business's assumed cost behaviour holds. Within it, fixed costs stay stable in total and variable costs stay proportional, so cost estimates remain valid.
See it move
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A cost-behaviour chart plots volume in units on the horizontal axis and cost in euros on the vertical axis. Warehouse rent holds flat at €18,000 between 1,000 and 9,000 units, then steps up abruptly to €34,000 when a second warehouse becomes necessary beyond that band, illustrating that the assumption of fixed cost behaviour applies only within the relevant range and breaks down as soon as activity moves outside it.
Where it fits
SubjectCost AccountingCoreTopicCost Behaviour & EstimationCore