Why Is Identification of a Relevant Range Important

question 201

Multiple Choice

Why is identification of a relevant range important?

• A) It is required under GAAP.
• B) Cost behavior outside of the relevant range is not linear which distorts CVP analysis.
• C) It directly impacts the number of units of product a customer buys.
• D) It is a cost that is incurred by a company that must be accounted for.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the reporting of financial information globally.

Listed Public Company

A corporation whose shares are traded on a public stock exchange, allowing for widespread ownership by investors.

Protective Rights

Rights granted to minority shareholders or debt holders to protect their interest, which may include veto powers on major corporate actions.

Capital Expenditure

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.