A Product's Markup Percentage Needs to Cover Operating Profits When

question 112

Multiple Choice

A product's markup percentage needs to cover operating profits when the cost base is:

• A)the full cost of the product
• B)the variable cost of the product
• C)variable manufacturing costs
• D)All of these answers are correct.

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Definitions:

Long Run

A period sufficient for all inputs and production processes to be adjusted, including changing the scale of production facilities.

Average Fixed Costs

Average Fixed Costs are the total fixed costs of production divided by the quantity of output produced.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short run, such as rent or salaries.

TFC

Total Fixed Cost, which refers to the sum of all costs that do not change with the level of output produced by a firm.