Relevant Range

Span of activity over which a certain cost behavior holds true. It is risky to extrapolate beyond the relevant range because there are no observations outside the range. For example, fixed costs will not change only for a specified range of volume of activity, called the relevant range. Beyond this, fixed costs are not constant. Break-Even Analysis and analysis of Mixed Costs are most useful only in this range of activity-that is, the volume zone in which the behavior of variable costs, fixed costs, and selling prices can be predicted with reasonable accuracy.