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Business Finance Healthcare Finance: An Introduction to Accounting and Financial Management

The meaning of relevant range Introduction: Accounting can be defined as a process wherein financial transactions are recorded. This process summarized, evaluates and provides useful insight about these transactions to tax collection entities, regulators and agencies. Accounting helps in summarizing the cash flows, financial position and operation of the company over an accounting period. Relevant range can be defined as the normal amount or activity or normal range of volume in which the fixed cost of the company will not change with the change in the amount or volume of activity. Relevant range is the terminology which is embraced in the description of fixed cost for the reason that the company would take every possible action to reduce its total fixed costs, if the volume or level of the company’s production were to decline to very low level. In a similar arrangement, the company would increase its fixed costs if the volume of the company is expected to increase significantly. Thus, the relevant range reflects the particular level of the activity which is bounded by the maximum and minimum amount. The expenses and revenues are likely to be different from the expected amount outside the boundaries of relevant range, whereas specific expense or revenue levels are expected to occur within the boundaries of relevant range.

The meaning of relevant range Introduction: Accounting can be defined as a process wherein financial transactions are recorded. This process summarized, evaluates and provides useful insight about these transactions to tax collection entities, regulators and agencies. Accounting helps in summarizing the cash flows, financial position and operation of the company over an accounting period. Relevant range can be defined as the normal amount or activity or normal range of volume in which the fixed cost of the company will not change with the change in the amount or volume of activity. Relevant range is the terminology which is embraced in the description of fixed cost for the reason that the company would take every possible action to reduce its total fixed costs, if the volume or level of the company’s production were to decline to very low level. In a similar arrangement, the company would increase its fixed costs if the volume of the company is expected to increase significantly. Thus, the relevant range reflects the particular level of the activity which is bounded by the maximum and minimum amount. The expenses and revenues are likely to be different from the expected amount outside the boundaries of relevant range, whereas specific expense or revenue levels are expected to occur within the boundaries of relevant range.

Solution Summary: The author defines relevant range as the normal amount or activity or normal range of volume in which the fixed cost of the company will not change with the change in the volume of activity.

Healthcare Finance: An Introduction to Accounting and Financial Management

Healthcare Finance: An Introduction to Accounting and Financial Management

6th Edition

ISBN: 9781567937411

Author: Louis C. Gapenski, Kristin L. Reiter

Publisher: Health Administration Press

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Chapter 5 Solutions

Healthcare Finance: An Introduction to Accounting and Financial Management

Ch. 5.1 - Prob. 1.1STQ Ch. 5.1 - Prob. 1.2STQ Ch. 5.1 - Prob. 1.3STQ Ch. 5.1 - Prob. 2.1STQ Ch. 5.1 - Prob. 2.2STQ Ch. 5.1 - Prob. 2.3STQ Ch. 5.1 - Prob. 2.4STQ Ch. 5 - Prob. 1.1STQ Ch. 5 - Prob. 1.2STQ Ch. 5 - Prob. 2.1STQ

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