When developing a cost model for a firm or segment of a firm, the cost model is only applicable within the __________ range of capacity of fixed costs.
A) Operating
B) Average
C) Marginal
D) Relevant

Question

Quizplus · Accepted Answer

The cost model is only applicable within the "relevant" range of capacity of fixed costs, as this is the range over which the assumptions about fixed and variable costs hold true. Outside of this range, cost behavior may change, making the model inaccurate.

When Developing a Cost Model for a Firm or Segment