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INTRODUCTION TO
ENGINEERING
ECONOMICS
©12017 Batangas State
University
Introduction
The technological and social environments in which we live continue to
change at a rapid rate. In recent decades, advances in science and engineering
have transformed our transportation systems, revolutionized the practice of
medicine, and miniaturized electronic circuits so that a computer can be placed
on a semiconductor chip. The list of such achievements seems almost endless. In
your science and engineering courses, you will learn about some of the physical
laws that underlie these accomplishments.
Engineering
The Accreditation Board for Engineering and Technology
states that engineering “is the profession in which a
knowledge of the mathematical and natural sciences
gained by study, experience, and practical is applied with
judgment to develop ways to utilize, economically, the
materials and forces of nature for the benefit of mankind.”
Engineering
Emphasized the economic aspects of engineering
The physical aspects
It is essential that the economic part of engineering
practice be accomplished well.
Engineers use knowledge to find new ways of doing
things economically.
1. Problem Definition
2. Development of Alternatives
3. Development of prospective outcomes
4. Selection of a decision criterion
5. Analysis and comparison of alternatives.
6. Selection of the preferred alternative
7. Performance monitoring and post evaluation of results.
26 ©2017 Batangas State University
General Economic Environment
Consumer and Producer Goods and Services
Overhead costs consists of plant operating costs that are not direct
labor or direct material costs.
Standard costs are planned costs per unit of output that are
established in advanced of actual production or service delivery.
Book costs are 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 used assets
Sunk Cost
Sunk costs is one that has occured in the past and has no relevance
to estimates of future costs and revenues related to an alternative
course of action.
Opportunity Cost