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1. FIXED COST - those that are unaffected by 10.

STANDARD - Representative costs per unit of


changes in activity level over a COSTS output that are established in
- feasible range of operations for advance of actual production or
the capacity available. service delivery
Example: Insurance and taxes on 11. CASH COST - Cost that involves a payment of
facilities, license fees, and cash and results in a cash flow
interest costs on borrowed 12. NONCASH - One that doesn’t involve a cash
capital COST transaction and is reflected in an
accounting system.
2. VARIABLE - those associated with an 13. BOOK COST - Costs that do not involve cash
COST operation that varies in a total payments, but rather represent
with the quantity of output or the recovery of past expenditures
other measures of activity level over a fixed period of time
3. INCREMENTAL - additional cost or revenue that - Example: depreciation charged for
COST results from increasing the the use of assets such as plant and
output of a system by one or equipment
- more units 14. SUNK COST - One that has occurred in the past
go/no go decisions and has no relevance to estimates
of future costs and revenues
4. RECURRING - those that are repetitive and related to an alternative course of
COST occur when an organization action. Not part of future cash
produces similar goods or flows. Cannot be recovered
services on a continuing basis 15. Opportunity - Incurred because of limited
- Variable costs are recurring costs Cost resources, such that the
- Fixed cost paid on a repeatable opportunity to use those resources
basis to monetary advantage in an
5. NONRECUR- - Not repetitive alternative use is often hidden or
RING COST implied

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)
ENGINEERING ECONOMY PRELIMS