Cost Analysis 2 Flashcards
What are recurring costs?
Recurring costs are expenses that repeat at regular intervals and are necessary for ongoing operations or maintenance.
Provide examples of recurring costs in engineering projects.
Maintenance, utilities, salaries and wages, and consumables like lubricants or chemicals.
Give an example of recurring costs in a civil engineering project.
Monthly inspections, salaries for maintenance personnel, and annual painting for a bridge.
What are nonrecurring costs?
Nonrecurring costs are one-time expenses incurred during the initial stages of a project or when making significant changes.
Provide examples of nonrecurring costs in engineering projects.
Design and development, equipment purchase, prototyping, and training.
Give an example of nonrecurring costs in a mechanical engineering project.
Research and development expenses, purchasing specialized equipment, and conducting performance testing for a new engine.
What are incremental costs?
Incremental costs refer to the additional expenses incurred when making a specific decision or taking a particular action.
Provide an example of incremental costs in bridge design.
Choosing a cable-stayed bridge over a conventional design involves higher construction, design, and maintenance costs.
What is cash cost?
The actual outflow of cash for transactions or operations, such as paying wages or purchasing inventory.
What is book cost?
The accounting value of an asset, reflecting its historical cost, depreciation, and adjustments over time.
How does cash cost differ from book cost?
Cash cost affects liquidity, while book cost influences financial statements and asset valuation.
What is life cycle cost?
The total cost of owning, operating, and maintaining an asset over its entire lifespan.
What are the components of life cycle cost?
Initial costs, operating costs, maintenance costs, energy costs, disposal costs, and residual value.
Give an example of life cycle cost analysis.
For delivery vehicles: considering purchase price, fuel costs, maintenance, and residual value to minimize overall costs.
