Post 2 - for budgets. Hi Linda, Good managers must not only...

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Linda McMahon 1 Apr 11 8:30 PM MST Professor and Class, Relevant range is a company’s normal operating range. It is necessary for a company to specify their relevant range since organizational costs change over time or if there is a major change in activity levels. By determining the relevant range of a company they will be able to analyze how far to project cost behaviors into the future. I sort of think that this takes into account the changes in economy, from the example in the book a tire for Toyota will increase the next year by $25 dollars, this to me is taking into effect the cost of living increases and business need to determine in a relevant range what the changes will be so they can forecast
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Unformatted text preview: for budgets. Hi Linda, Good managers must not only be able to understand the conceptual underpinnings of cost behavior, but they must also be able to apply those concepts to real world data that do not always behave in the expected manner. Cost data are impacted by complex interactions. Consider for instance the costs of operating a vehicle. Conceptually, fuel usage is a variable cost that is driven by miles. But, the efficiency of fuel usage can fluctuate based on highway miles versus city miles. Nevertheless, management must understand cost behavior, and this sometimes takes a bit of forensic accounting work. Jack...
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