1.Why is it important for engineers to learn about engineering economics?

It is important because engineers need to be knowledgeable about all the things that works behind the
building of a business.This enables them to be more efficient in their work and create newer and more
impactful methods.This is also prevents them to make unwise decisions and to maintain their project
stable and hopefully progressible.

2. In what way can we apply engineering economics in utilizing our resources (land, labor, and

capital)?

We can use this knowledge in the application of industrial business.Having the sufficient skills to manage
one’s land,employees,and capital can greatly increase the chances that one’s business to flourish and
productive.With that said,Engineering Economics is one the many foundations of economic
development.

3. Read Section 1.3 (page 34) of the pdf you have downloaded ‘Engineering Economy’ by

Sullivan et. al. Write a short summary of what you understood.

I’ve understood that the seven step procedure is crucial in project design since it creates a detailed
structure of how the design should be and the alternatives it brought.This method analyzes the flow of
the design and reviews it for more alternatives

4. Differentiate Top-Down approach and Bottom-Up approach.

The top down approach is an approach that based it’s formulated estimation from past or recent project
data and modifies the data for changes in specific issues while the bottom up approach divides the
entirety of the plan into smaller parts and create an cost estimation from their.

5. Give examples of the following:

a. Standard Cost

rent payable

b. Sunk Cost

marketing campaign expenses

c. Opportunity Costs

walking to school instead riding a passenger vehicle which cost money

d. Life-Cycle Cost.

Car plan(Car price,maintenance,and gasoline)

6. Refer to slides 48, 49 and 50, knowing the examples, define and differentiate:

a. Direct material from indirect material

Direct material is something that can be easily measured and be traced from the actual product while
the indirect material is something part of the manufacturing process but is not visibly found on the
product and are just factors to help in making the product.

b. Direct labor from Indirect labor

Direct labor are cost that directly given to the employees that are responsible for manufacturing the
product,or in other words,part of production team while the indirect labor focuses in the personnel that
are non-manufacturer but are responsible for selling and advertising the product.

c. Direct expenses from Indirect Expenses

Direct expenses focuses on the cost of the materials,personnel and equipment necessary for creating
the building and manufacturing the product while the indirect material focuses on the non-
manufacturing parts such as rent of the establishment,taxes to pay,and insurance offers.