Short-run prices should at least recover ________.
A) full cost of producing a product
B) fixed manufacturing overhead
C) variable cost of producing a product
D) variable and fixed manufacturing overhead

Question

Quizplus · Accepted Answer

In the short-run, a company should aim to recover at least the variable cost of producing a product. This is because in the short-run, fixed manufacturing overhead costs cannot be easily reduced or avoided, so recovering only the fixed costs plus variable costs may not be sustainable in the long run. By covering variable costs, a company can still generate some profit margin to contribute towards covering fixed manufacturing overhead costs.

Short-Run Prices Should at Least Recover ________