Short-Term Costs Example

To define what a short term costYou have to focus on inputs, as the short or long term is directly linked to this.

If the input is restricted, the cost is in the short term, since short-term costs are characterized by the stability of the destination of the capital handled.

The result of the investment is projected in the short term, without this allowing the amount invested to be redirected. This regardless of whether a capital has been explicitly left for it.

Thus, the size of the company chosen (understand the work or project as a company) by the investor directly affects the amount of inputs and being a A firm that provides limited inputs produces results in a short period of time without giving the employer room to manage changes and subsequent alternatives.

Example of short-term costs:

The three parakeets bakery has a specific capital destined to make purchases, due to the circumstance of company, the costs are short-term costs, and therefore when buying the material for the production of white bread, there are limited to make changes or movements that allow them to carry out other projects such as cakes or bakery for events.

Having made the purchase investment, the costs are previously directed to the payments of:

• Gas
• Transport
• Flour
• Sugar
• Yeast
• Salt
• Salaries

It is precisely because of the urgency and the specificity of the investment that it will remain in the category of short-term costs, without allowing the employer or manager to make last-minute changes hour.

At the end of the process, the delivery of the materials and the elaboration of the product are fulfilled at the moment precise without this allowing reinvestments or parallel or alternate movements with the funds to supplies.