Changes in prices of labor,material

Changes in prices of labor,materials,and other inputs must be adjusted so current prices are used

Costs that use not a function of output should be excluded.Because we are dealing with short-run cost functions,fixed costs should not have an influence on pricing or output decisions

Closely allied to the previous point is the question of depreciation.Accountants usually record depreciation on a time-related basis.Depreciation is often not related to actual usage but follows accounting convention as adapted to tax rules.If "use" depreciation can be isolated from the accounting data, only that portion should be included in costs. But it must be kept in mind that recorded depreciation is based on the original cost of the equipment, whereas economic depreciation should be based on replacement value