Homework Answers
Relevant range of activity is the range of output in which the variable cost per unit and total fixed costs remain constant
Variable cost per unit is represented b y direct material cost per unit in this case
Since it is not constant at output level of 1000-3000 units, it is NOT the relevant range
It is constant at $2 per unit within 5000-9000 units, and fixed costs (Rent) are constant at $7,000, it is the RELVANT range
The variable cost per unit is again non constant after 9000 units
Hence, the relevant range is 5000-9000 units
Variable cost per unit = $2
Fixed cost = $7000
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