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Engineering Economics: William Loendorf, P.E
Engineering Economics: William Loendorf, P.E
Engineering Economics: William Loendorf, P.E
Engineering Costs
and Cost Estimating
1
Engineering Costs
Cash flow
$20,000.00
C a s h f lo w
$-
$(20,000.00) 0 1 2 3 4 5 6 Overhaul
$(40,000.00) O&M
$(60,000.00) Capital costs
$(80,000.00)
$(100,000.00)
Ye ar
Summary
This chapter introduced the cost concepts: fixed and
variable, marginal and average, sunk, opportunity,
recurring and nonrecurring, incremental, cash and
book, and lifecycle.
Fixed costs are constant and unchanging as
volumes change, while variable costs change as
output changes.
Fixed and variable costs are used to find the
breakeven value between costs and revenues, as
well as the regions of net profit and loss.
A marginal cost is for one more unit, while the
average cost is the total cost divided by the number
of units.