The Relevant Range (Managerial Accounting)

This video discusses the relevant range in Managerial Accounting. The relevant range is the range of activity for which assumptions about the company's cost behavior are valid. If you start a restaurant and pay $3,000 a month for rent, this rent will behave as a fixed cost; whether you have 10 customers or 50 customers, the rent remains the same. However, this assumption is only valid for a certain range of activity; if you have 5 million customers, for example, you might need a much larger restaurant, in which case your rent cost will significantly increase. Thus, a company might say that a cost is fixed for a range from a range of 0 customers to 2,000 customers. Relevant range is an important concept because costs will frequently change their behavior outside of the relevant range. — Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS & OTHER FREE GUIDES * http://eepurl.com/dIaa5z — MICHAEL’S STORY * https://www.edspira.com/about/ — LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ — CONNECT WITH EDSPIRA * Website: https://www.edspira.com * Instagram: https://www.instagram.com/edspiradotcom * LinkedIn: https://www.linkedin.com/company/edspira * Facebook: https://www.facebook.com/Edspira * Reddit: https://www.reddit.com/r/edspira *TikTok: https://www.tiktok.com/@edspira — CONNECT WITH MICHAEL * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin * Twitter: https://www.twitter.com/Prof_McLaughlin * Instagram: https://www.instagram.com/prof_mclaughlin * Snapchat: https://www.snapchat.com/add/prof_mclaughlin *TikTok: https://www.tiktok.com/@prof_mclaughlin — HIRE MCLAUGHLIN CPA * Website: http://www.MichaelMcLaughlin.com/hire-me