How is the relevant range of activity related to CVP analysis?
A) Managers are normally uncertain about the relevant range
B) In CVP analysis, operations are assumed to be within the relevant range
C) The relevant range is irrelevant to CVP analysis
D) The relevant range affects costs but not revenues

Question

Quizplus · Accepted Answer

In CVP analysis, it is assumed that operations will remain within the relevant range where the relationship between cost, volume, and profit is linear. Therefore, understanding and identifying the relevant range is crucial in conducting CVP analysis accurately.

How Is the Relevant Range of Activity Related to CVP