What is Relevant Range? The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.

What does the relevant range mean?

The relevant range is the range of activity where the assumption that cost behavior is a straight line (linear) is reasonably valid. ... With variable costs then, the relevant range will be the range where the cost of adding one more, will be the same as the last.

Why is the relevant range important?

Why is relevant range important? Relevant range is important because if you make the assumption that all of your costs will remain constant, whether they are fixed or variable, you may make errors on your projections.