Term
| Total Variable Costs (TVC) |
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Definition
| Total costs for variable factor inputs |
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Term
| Total Variable Costs (TVC) |
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Definition
| Varies with the amount of output produced |
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Term
| Total Variable Costs (TVC) |
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Definition
| Direct or unavoidable costs |
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Term
| Total Variable Costs (TVC) |
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Definition
| Unit factor cost times number of units used |
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Term
| Total Variable Costs (TVC) |
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Definition
| Those associated with operation that vary in total with the quantity of output or other measures of activity level |
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Term
| Total Variable Costs (TVC) |
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Definition
| Examples include: costs of material and labor used in a product or service because they vary in total with the number of output units—even though costs per unit remain the same |
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Term
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Definition
| repetitive and occur when a firm produces similar goods and services on a continuing basis |
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Definition
| ________ are recurring costs because they repeat with each unit of output |
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Definition
| A fixed cost that is paid on a repeatable basis is also a ______________ |
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Term
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Definition
| those that are not repetitive, even though the total expenditure may be cumulative over a relatively short period of time |
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Term
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Definition
| Typically involve developing or establishing a capability or capacity to operate |
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Term
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Definition
| Examples are purchase cost for real estate upon which a plant will be build, and the construction costs of the plant itself |
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Term
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Definition
| Total cost divided by total output |
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Definition
| Total fixed cost divided by total output |
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Definition
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Term
| Average Variable Cost (AVC) |
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Definition
| Total variable cost divided by total output |
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Term
| Average Variable Cost (AVC) |
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Definition
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Term
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Definition
| incremental cost is included in it |
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Term
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Definition
| The additional cost that results from increasing the output of a system by one (or more) units |
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Term
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Definition
| Often associated with a “go/no go” decisions that involve a limited change in output or activity level |
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Term
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Definition
| Increase in total cost from the last unit produced |
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Term
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Definition
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Definition
| Difficult to allocate a specific output or activity—costs of common tools, general supplies, and equipment maintenance |
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Term
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Definition
| Can be reasonably measured and allocated to a specific output or work activity—labor and material directly allocated with a product, service or construction activity |
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Definition
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Term
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Definition
| Common method of allocating costs among products, services and activities in proportion to the sum of direct labor and materials cost |
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Definition
| Representative costs per unit of output that are established in advance of actual production and service delivery |
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Term
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Definition
| Process routing sheets, standard times, standard labor rates |
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Term
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Definition
| Material quantities per unit, standard unit materials cost |
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Term
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Definition
| Total factory overhead costs allocated based on prime costs |
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Definition
| total amount produced in a given period |
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Term
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Definition
| Total Product divided by number of variable factor input units used |
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Definition
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Definition
| The change in Total Product from use of one more variable factor input |
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Term
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Definition
| Also known as Incremental Product |
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Term
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Definition
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Term
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Definition
| the total cost of producing an output |
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Term
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Definition
| the sum of total fixed costs and total variable costs |
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Term
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Definition
| The study of how limited and scarce resources are chosen to satisfy unlimited human wants |
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Term
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Definition
| The study of how individuals and societies choose to use scarce resources that nature and previous generations have provided |
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Term
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Definition
| The study of man about the everyday business of life |
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Term
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Definition
| the person came up with the definition "the study of man about the everyday business of life" |
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Term
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Definition
| All gifts of nature, such as: water, air, minerals, sunshine, plant and tree growth, as well as the land itself which is applied to the production process |
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Definition
| The efforts, skills, and knowledge of people which are applied to the production process |
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Term
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Definition
| also known as Physical Capital |
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Term
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Definition
| Tools, buildings, machinery—things which have been produced which are used in further production |
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Term
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Definition
| Assets and money which are used in the production process |
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Term
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Definition
| Education and training applied to labor in the production process |
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Term
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Definition
| Human resource that organizes the other resources to produce goods and services |
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Term
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Definition
| Humans that come up with new ideas about how to product; bear monetary, professional and reputation risk |
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Term
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Definition
| Sunk Costs + Opportunity Costs = |
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Term
| Sunk Costs + Opportunity Costs |
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Definition
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Term
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Definition
| Represent income given up by not using production factors in the next best way |
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Term
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Definition
| The cost of the best rejected (i.e. foregone) opportunity |
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Term
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Definition
| Unrecoverable costs on equipment and/or processes; zero opportunity costs |
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Term
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Definition
| 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 |
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Term
| Engineering Economic Analysis Procedure |
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Definition
| (1) Problem Recognition, Formulation, and Evaluation, (2) Development of the Feasible Alternatives, (3) Development of Cash Flows For Each Alternative, (4) Selection of a Criterion (or Criteria), (5) Analysis and Comparison of the Alternatives, (6) Selection of the Preferred Alternative, (7) Performance Monitoring and Post-Evaluation Results |
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Term
| (1) Problem Recognition, Formulation, and Evaluation, (2) Development of the Feasible Alternatives, (3) Development of Cash Flows For Each Alternative, (4) Selection of a Criterion (or Criteria), (5) Analysis and Comparison of the Alternatives, (6) Selection of the Preferred Alternative, (7) Performance Monitoring and Post-Evaluation Results |
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Definition
| Engineering Economic Analysis Procudure (7) |
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Term
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Definition
| Dollars used to buy production factors and pay interest |
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Term
| Cash Costs, Book Cost (Noncash Cost), Sunk Cost |
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Definition
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Term
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Definition
| a cost that involves payment in cash and results in cash flow |
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Term
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Definition
| A payment that does not involve cash transaction |
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Term
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Definition
| Represent the recovery of past expenditures over a fixed period of time |
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Term
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Definition
| Most common example of book cost |
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Term
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Definition
| Value lost in buildings and equipment because of age, wear, obsolesence |
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Term
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Definition
| What is charged for the use of assets, such as plants and equipment |
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Definition
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Term
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Definition
| Unrecoverable costs on equipement and/or processes |
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Term
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Definition
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Term
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Definition
| Those unaffected by changes in activity level over a feasible range of operations for the capacity or capability available |
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Term
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Definition
| Typically include insurance and taxes on facilities, general management and administrative salaries, license fees, and interest costs on borrowed capital |
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Term
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Definition
| When large changes in usage of resources occur, or when plant expansion or shutdown is involved, ____________ will be affected |
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Term
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Definition
| Total costs for fixed factor inputs |
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Definition
| Constant for any amount of output produced--even zero |
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Term
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Definition
| Unavoidable or overhead costs |
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Term
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Definition
| To produce any output at the least cost, buy inputs until the marginal product per dollar spent on each input is equal |
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Term
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Definition
| if the price of one input factor falls while the prices of the remaining factors remain unchanged, firms profit by substituting the now cheaper factor for all other factors |
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Term
| Long-Run Average Cost Curve (LRAC) |
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Definition
| The envelope of all short-run average total cost curves of that firm |
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Term
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Definition
| Measure of the value which consumers of a product or service place on that product or service |
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Term
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Definition
| Reflection of this measure of value and is represented by price per quantity of output |
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Term
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Definition
| Some constant value minus some multiple of the quantity demanded |
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Definition
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Definition
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Term
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Term
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Definition
| Occurs where total revenue exceeds total cost by the greatest amount |
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Term
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Definition
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Term
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Definition
| where profit maximization occurs |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| To ensure profit maximization rather than minimization, the sign of the second derivative must be ________ |
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Term
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Definition
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Term
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Definition
| breakeven determination occurs where: |
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Term
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Definition
| Also known as capital investment |
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Term
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Definition
| the capital (money) required for most activities of the acquisition phase |
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Term
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Definition
| the capital (money) required for most activities of the acquisition phase |
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Term
| Operation and Maintenance Cost |
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Definition
| includes many of the recurring annual expense items associated with the operation phase of the life cycle |
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Term
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Definition
| includes non-recurring costs of shutting down the operation |
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Term
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Definition
| Wealth in the form of money or property that can be used to produce more wealth |
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Term
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Definition
| That owned by individuals who have invested their money or property in a business project or venture in the hope of receiving a profit |
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Term
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Definition
| Often called borrowed capital |
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Term
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Definition
| Obtained from lenders (e.g. through the sale of bonds) for investment |
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Term
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Definition
| The total interest earned or charged is linearly proportional to the initial amount of the loan (principal), the interest rate and the number of interest periods for which the principal is committed |
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Term
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Definition
| Whenever the interest charge for any interest period is based on the remaining principal amount plus any accumulated interest charges up to the beginning of that period |
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Term
| Consumer Price Index (CPI) |
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Definition
| Based on a market basket of the most commonly consumed goods and services |
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Term
| Consumer Price Index (CPI) |
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Definition
| Uses some stated base year quantities as the constant (or weight) for the index |
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Term
| Consumer Price Index (CPI) |
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Definition
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Term
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Definition
| Based on all of the goods and services produced in the economy for a given year |
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Term
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Definition
| Uses current year quantities as the constant (or weight) for the index |
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Definition
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Term
| Learning Curve Method of Projecting Costs |
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Definition
| Mathematical model that explains increasing worker efficiency and improved performance from repetitive production |
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Term
| Learning Curve Method of Projecting Costs |
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Definition
| Also experience curve or manufacturing progress function |
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Term
| Learning Curve Method of Projecting Costs |
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Definition
| Shows the reduction in costs resulting from continued employee efficiency as these employees process additional output |
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Term
| Learning Curve Method of Projecting Costs |
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Definition
| measured in terms of the percentage decrease in additional labor cost each time output doubles |
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Term
| Power Sizing Technique of Projecting Costs |
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Definition
| Also referred to as exponential model |
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Term
| Power Sizing Techinique of Projecting Costs |
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Definition
| Used for costing plants and equipment |
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Term
| Power Sizing Technique of Projecting Costs |
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Definition
| Recognizes that cost varies as some power of the change in capacity or size |
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Term
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Definition
| Recognizes that cost varies as some power of the change in capacity or size |
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Term
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Definition
Changes usually occur as a result of:
•Technological advances
•Availability (scarcity) of labor and materials
•Changes in consumer buying patterns |
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Term
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Definition
| It establishes a reference from some base time period (i.e. a base year) |
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Definition
| When compared to a current-year index measures the amount (%) change from the base period |
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Definition
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Definition
| An extension of the unit method |
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Definition
| Sum of component costs estimated directly and the products of per unit costs and component quantities |
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Term
| Cost Estimating Relationship (CER) |
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Definition
| A mathematical-model building technique based on statistical analysis |
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Term
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Definition
| Dependent variable linearly related to independent variable – both x and y coordinates linearly incremented (linear grid) |
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Term
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Definition
| Both dependent and independent variables are exponentially related. Both x and y coordinates logarithmically incremented (log-log relationship) (logarithmic grid) |
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Term
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Definition
| This equation is meant to describe, as closely as possible, the respective relationship that exists between a dependent variable and one or more independent variables |
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Term
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Definition
| Dependent variable linearly related to logarithmic function of independent variable. Y-axis coordinate linearly increment. x-axis coordinate logarithmically incremented (semi-log relationship) |
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Term
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Definition
| Dependent variable logarithmically related to linear function of the independent variable. Y-axis coordinate is logarithmically incremented; x-axis coordinate is linearly incremented (semi-log relationship) |
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Term
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Definition
| When measured by the appropriate scale, each will produce a linear regression (trend) line |
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Term
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Definition
| Provides an average of the differences between actual and predicted values |
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Term
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Definition
| The square root of the sum of the differences of actual sample values and predicted sample values divided by the sample size |
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Term
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Definition
| The smaller this is, the better the predition |
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Term
| Correlation Coefficient (R) |
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Definition
| Measures how closely the data points meet the trend or regression line |
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Term
| Correlation Coefficient (R) |
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Definition
| a ratio of explained deviation to total deviation |
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Term
| Correlation Coefficient (R) |
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Definition
| The closer that the absolute value of this number is to 1, the more closely the CER equation explains the actual values in the dependent variable population |
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Term
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Definition
| Used to describe the process by which the present and future cost consequences of engineering designs are forecast |
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Term
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Definition
| Used to provide information used in setting a selling price for quoting, bidding, or evaluating contracts |
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Term
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Definition
| Used to determine whether a proposed product can be made and distributed at a profit |
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Definition
| Used to evaluate how much financial capital can be justified for process changes or other improvements |
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Definition
| Used to establish benchmarks for productivity improvement programs |
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Definition
| Uses historical data from similar engineering projects |
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Definition
| Used to estimate costs, revenues, and other parameters for current project |
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Term
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Definition
| Modifies original data for changes in inflation/deflation, activity level, weight, energy consumption, size, etc. |
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Term
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Definition
| Best use is early in estimating process |
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Term
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Definition
| More detailed cost-estimating method |
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Term
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Definition
| Attempts to break down project into small, manageable units and estimate costs, etc... |
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Term
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Definition
| Smaller unit costs added together with other types of costs to obtain overall cost estimate |
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Term
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Definition
| Works best when detail concerning desired output defined and clarified |
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Term
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Definition
| the level of output consistent with the lowest point of the ATC |
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Term
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Definition
| Production at a point less than the lowest point of ATC |
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Term
| Above (Exceeded) Capacity |
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Definition
| Production at a point greater than the lowest ATC |
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Term
| Medium of Exchange, Store of Value, Unit of Account |
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Definition
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Term
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Definition
| Medium of Exchange, Store of Value, Unit of Account |
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Definition
| Means of payment for goods or services; what sellers accept and buyers pay |
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Definition
| A way to transport buying power from one time period to another |
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Term
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Definition
| A precise measurement of value or worth; allows for tabulating debits and credits |
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