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Summary Engineering Economy

- William G Sullivan, et al
ISBN-13 9780131486492
339 Flashcards & Notes
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A snapshot of the summary - Engineering Economy Author: William G Sullivan, Elin M Wicks, and James T Luxhoj ISBN: 9780131486492

  • 1 Introduction to Engineering Economy

  • What are the 7 principles of engineering economy?
    1. Develop the Alternatives;
    2. Focus on the Differences;
    3. Use a Consistent Viewpoint;
    4. Use a Common Unit of Measure;
    5. Consider all Relevant Criteria;
    6. Make Uncertainty Explicit;
    7. Revisit your Descisions;
  • 2 Cost Concepts and Design Economics

  • 2.1 Cost Terminology

  • Give [6] examples of fixed cost
    • Insurance and taxes on facilities
    • General management
    • Administrative salaries
    • License fees
    • Interest costs
    • Borrowed capital
  • Give [2] examples of nonrecurring costs
    • Development cost 
    • Establishment cost capability/capacity. 
  • Give the definition of indirect costs and a different naming
    Indirect costs are costs that are difficult to attribute or allocate to a specific output or work activity. 

    Overhead cost
  • Explain the term normally considering indirect costs
    When allocating directly to a specific output involves too much effort, the allocation is done through a selected formula. Such as, proportional.

    This is done through established costs per unit since these costs are associated with a certain level of production.
  • Give [4] examples of overhead cost
    • Electricity 
    • General repairs
    • Property taxes
    • Supervision
  • Give the definition of noncash cost, include a different naming and a most common example.
    Noncash cost also referred to as book cost do not involve cash payments.

    depreciation charged for the use of assets.
  • Life-cycle
    • What [2] phases does it exist of? 
    • Where are the most costs made? 
    • Where can the most costs be saved? 
    The greatest potential for achieving life-cycle cost savings is early in the acquisition phase.
  • Give the definition of the term working capital
    Funds required for current assets (other than fixed assets such as equipment, facilities etc.) that are needed for the startup and support of operational activities.
  • Give the definition of operation and maintenance cost 
    Includes many of the recurring annual expense items associated with the operation phase of the life cycle.
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