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Learning objective 4 explain the significance of the

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Learning Objective 4: Explain the significance of the relevant range.
Total fixed costs also do not have a straight-line relationship over the entire range of activity.Some fixed costs will not change. But it is possible for management to change other fixedcosts.For most companies, operating at almost zero or at 100% capacity is the exception ratherthan rule. Instead, companies often operate over a somewhat narrower range, such as 40-80% of capacity. The range over which a company expects to operate during a year is calledthe relevant range of the activity index. Within the relevant range, as shown in the diagramabove, a straight-line relationship generally exists for both variable and fixed costs.Learning Objective 5: Explain the concept of mixed costs.
mileage charge is a variable cost. The graphic presentation of the rental cost for a one-dayrental is as follows.In this case, the fixed cost element is the cost of having the service available. The variablecost element is the cost of actually using the service. Another example of a mixed cost isutility costs (electricity, telephone and so on), where there is a flat service fee plus a usagecharge.Learning Objective 6: Explain cost-volume-profit analysis.
The following assumptions underlie each CVP analysis.

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