1. FIXED COST - those that are unaffected by
STANDARD - Representative costs per unit of
changes in activity level over a
- feasible range of operations for
the capacity available.
Example: Insurance and taxes on
facilities, license fees, and
interest costs on borrowed
capital
2. VARIABLE - those associated with an
COST operation that varies in a total
with the quantity of output or
other measures of activity level
3. INCREMENTAL - additional cost or revenue that
COST results from increasing the
output of a system by one or
- more units
go/no go decisions
4. RECURRING - those that are repetitive and
COST occur when an organization
produces similar goods or
services on a continuing basis
- Variable costs are recurring costs
- Fixed cost paid on a repeatable
basis
5. NONRECUR- - Not repetitive
RING COST
6. DIRECT COST - Those that can be reasonably
measured and allocated to a
specific output or work activity
7. INDIRECT - Those that are difficult to
COST attribute or allocate to a specific
output or work activity
- “too much effort”
8. OVERHEAD - Consist of plant operating costs
COST that are not direct labor or direct
material cost
- Examples: Electricity, general
repairs, property taxes and
supervision
9. PRIME COST - Direct material costs
(In a manufactu-
ring process)
10.
COSTS output that are established in
advance of actual production or
service delivery
11. CASH COST - Cost that involves a payment of
cash and results in a cash flow
12. NONCASH - One that doesn’t involve a cash
COST transaction and is reflected in an
accounting system.
13. BOOK COST - Costs that do not involve cash
payments, but rather represent
the recovery of past expenditures
over a fixed period of time
- Example: depreciation charged for
the use of assets such as plant and
equipment
14. SUNK COST - One that has occurred in the past
and has no relevance to estimates
of future costs and revenues
related to an alternative course of
action. Not part of future cash
flows. Cannot be recovered
15. Opportunity - Incurred because of limited
Cost resources, such that the
opportunity to use those resources
to monetary advantage in an
alternative use is often hidden or
implied
ENGINEERING ECONOMY PRELIMS