Answer
a) Cost behavior is a representation of the way the cost changes based on a diversity of activities.
b) The relevant rage represents that range in which the total fixed cost and also the variable cost is constant. Out of this range, the two costs can differ.
Work Step by Step
a) Activities that can affect the cost are represented by a change in terms of the volume of production or the companies sales.
b) Example :
A shop space is available for rent at a price of $40,000 per year in increments of 800 square feet. If the business will become better over time, more space will be needed, which means that the total cost will also be increased.
