relevant range

The relevant range is usually used to describe fixed costs. We often say that fixed costs will not change as volume changes. However, if the size triples, there will likely be more fixed costs as the company will need more space and more managers. Accordingly, we point out that costs are fixed only within an appropriate or reasonable range of activities.

Relevant range is the normal activity level within which cost behavior assumptions (e.g., fixed costs remaining constant) are valid.

- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.

- Example: The costing team uses **relevant range** to allocate costs and analyze margins by product line.

- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.