Engineering Cost
Seen in ECE192. In order to make good economic decisions about project, cost analysis is required. Costs based on how they relate to the level of output (production level) or activity can be classified as follows:
- Fixed Cost: constant, does not depend on the level of output or activity
- Insurance costs, property taxes, salaries, insurance.
- Variable Cost: depends on the level of output or activity:
- Product supplies, fuel, raw material used in production, cost of utilities that relate to production volume.
The Total Cost is simply the sum of fixed and variable costs.
These two are confusing:
- Marginal Cost: variable cost to produce one more unit output.
- Average Cost: total cost of an output or activity divided by number of output units produced
Other types of costs
- Sunk Cost
- Opportunity Cost
- Incremental Cost: Cost differences between two alternatives
- Cash Cost
- Book Cost
- Recurring Cost
- Non-recurring Cost
- Life-Cycle Cost