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Hi, these terms crop up from time to time. I’m trying to make sure I have understood them correctly. Looked on line and I think I get it, with long run being that all variables can be changed but short run only some or one can be?
Would a short run example be where we view wages as a fixed cost even when production changes, if staff are salaried by the hour. But long run would mean we could recruit/change staffing levels to meet needs?
Thanks
What you have written is correct.
However the place it is most likely to be of relevance in the exam is in questions on throughput accounting, because as I explain in my free lectures we assume (when using throughput accounting) that in the short-term all costs are fixed apart from materials.
Thanks John, yes it was a combination of your lectures on throughput accounting, along with a recently read Decision Tree ACCA article that got me thinking about it again. Thanks
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