I am taking a business course but I have absolutely no idea about anything, so I have many questions that I'm sure I'll be posting. I wanted to know the relationship between step-fixed costs and the relevant range. Does anyone know?:confused: :confused: :confused:

Within a relevant range, the cost is usually remains constant. For example, you are buying frozen pizza in a box from the grocery store. One pizza can feed 3 guys. Step-fixed cost is the cost of the pizza, it is sold by the box, there is no partial pizza to be sold. The relevant range is the 3 guys, once it's more than 3, it goes up to the next level->need another box of pizza. When you have 4 guys waiting to eat pizza, you need to buy 2 pizza, not 1.

Step fixed cost is the cost that remains fixed till a certain range (known as relevant range) exceeding which the cost gets fixed again to that relevant range... Suppose a warehouse that you are having to keep the inventory bears a monthly rent of Rs.50000 having capacity of about 500000 bags of flour or any other thing.. Now what happens is that you have to bear the 50000 rupees per month apart from the number of bags u keep in the warehouse but u cannot exceed the range of 500000 bags which is the relevant range... Now for a single exceeding bag that you intend to keep in the warehouse you have to acquire another warehouse on rent thereby bearing another 50000 making a total of 100000 to keep another 500000 bags.This relationship when plotted shapes out a 'step' that is why this type of cost is called a step fixed cost