Engineering Economy Cost terminologies lecture

1. ENGINEERING
ECONOMICS
ENGG 404
Introduction to
Engineering Economy
Part 2

2. Cost Terminology
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3. Cost Terminology
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4. Cost Terminology
1 cake 2 cakes 7 cakes 10 cakes 0 cakes
Cost of sugar,
flour, butter,
and milk
Php 280.00 Php 560.00 Php 1,960.00 Php 2,800.00 0
Direct labor Php 560.00 Php 1,120.00 Php 3,920.00 Php 5,600.00 0
TOTAL
VARIABLE
COST
Php 840.00 Php 1,680.00 Php 5,880.00 Php 8,400.00 0

5. Cost Terminology
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6. Cost Terminology
Cost per unit Total cost
10,000 units $30 $300,000
12,000 units $27.50 $330,000
Thus, the total incremental cost to produce additional 2000 units is
$30,000 ($330,000-$300,000). The incremental cost per unit is $15
($30,000/2,000 units).

7. Cost Terminology
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8. Cost Terminology
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9. Cost Terminology
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10. Cost Terminology
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11. Cost Terminology (Cash Cost vs Book Cost)
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12. Cost Terminology
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13. Cost Terminology
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14. Cost Terminology
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15. Cost Terminology (Gen. Economic Environment)
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16. Cost Terminology (Gen. Economic Environment)
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17. Cost Terminology (Market Structure)
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18. THANK YOU!
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