M1 CPR2

CE40-2/E01
M1-CPR
CLASS PRODUCED REVIEWER
ENUMERATE AND GIVE A BRIEF DESCRIPTION FOR EACH:
1. Functions and Uses of Engineering Economy
Engineering Economics ensures that a person makes sensible decisions. The following is the logical decision-making process:
a. Recognizing the issue
b. Specifying the goals
c. Obtain all of the necessary information
d. Create a list of viable options
e. Determine the choice criterion to be used
f. Choose the most suitable alternative
By using the engineering economy, people can project the future by doing the following:
a. In a required investment, estimation is used.
b. By anticipating a product's demand.
c. By making an educated guess at a selling price.
d. By assessing the cost of production.
e. By estimating the life of a product.
2. Engineering Economy Techniques
a. Future Worth Analysis - it deals with circumstances in the future rather than the present, similar to present worth analysis.
b. Benefit-Cost Analysis - This analysis compares ratios.
c. Payback Period - This approximates an analytical process that measures the length of time until cumulative benefits and
expenses are equal.
d. Sensitivity and Break Analysis – Breakeven analysis identifies the circumstances under which two options are comparable. In
contrast, sensitivity describes the relative amount of a single adjustment in one or more components of a problem that is sufficient
to affect a specific option.
3. Engineering Economic Analysis Procedures
a. Determine the issue, your understanding of it, and the project's goal.
b. Gather relevant and readily available information and outline every alternative to a solution.
c. Make realistic cash flow estimates.
d. Choose a metric for valuing things economically so that you can make decisions.
e. Analyze each option, take non-economic aspects into account, and perform sensitivity analysis as necessary.
f. Choose the most suitable option.
g. Implement the solution and monitor the results.
4. Intangible Values
Intangible value is a value that is created or owned by a firm but has no physical form. Examples of intangible values are:
a. Customer Experience – It is an approach to business that focuses mainly on customer satisfaction.
b. Brand – It is the identity and reputation of products and services.
c. Organizational Culture – a set of organizational realities that emerge from the employees' experience. It is mostly beyond
management's direct control but can be shaped over time.
d. Talent – is a natural ability like leadership, engineering, design, and marketing.
e. Know-how – is the practical knowledge that enables an effective work approach.
f. Intellectual Property - trade secrets, trademarks, copyright, designs, and patents
g. Relationships – bonds created between customers, employees, owners, partners, and communities associated with their
industry.
5. Costs
Depending on the context, the word "costs" can have a range of definitions. An engineering economy study's theories and other
economic tenets are based on the problem situation and the choice that must be taken.
a. Fixed Costs - Fixed costs are expenses that remain constant regardless of changes in production, whether or not something
is created.
b. Variable Costs - Costs that change depending on the result.
c. Semi-Variable Cost - Labor is an example of a semi-variable cost that varies over time but still depends on the goods produced.
d. Total Expenses – The sum of fixed and variable costs.
e. Marginal Costs - The marginal cost is the price of producing an extra unit or item that will be sold.
f. Opportunity Cost - The price of disregarding the next-best option is the opportunity cost.
g. Economic Cost - Direct costs (accounting expenses) and opportunity costs are included in the economic cost.
h. Accounting Costs - Accounting expenses are the money spent on producing a specific good. It covers necessary variable
and fixed costs for the producer.
i. Sunk Costs - While they have been spent, these costs cannot be recovered. You couldn't get back any sunk costs if you left
the business.
j. Avoidable Costs - They are pointless and avoidable. These are also known as escapable expenses.
k. Social Costs - This sums up all societal costs. It will incorporate personal and outside expenses (costs incurred by a third
party). It also goes by the name "true expenses."
l. External Costs - These are the expenses that a third party bears. For instance, certain individuals may be harmed by passive
smoking if you smoke. The external cost is that.
m. Private Costs - The expenses you incur.
n. Social Marginal Cost - the societal price of creating one more unit. The sum of the Private Marginal Cost (PMC) and the
External Marginal Cost (EMC) is known as the Social Marginal Cost (SMC) (XMC).

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CE40-2/E01

ENUMERATE AND GIVE A BRIEF DESCRIPTION FOR EACH:

1. Functions and Uses of Engineering Economy

a. Recognizing the issue

b. Specifying the goals

c. Obtain all of the necessary information

d. Create a list of viable options

e. Determine the choice criterion to be used

f. Choose the most suitable alternative

a. In a required investment, estimation is used.

b. By anticipating a product's demand.

c. By making an educated guess at a selling price.

d. By assessing the cost of production.

e. By estimating the life of a product.

2. Engineering Economy Techniques

3. Engineering Economic Analysis Procedures

c. Make realistic cash flow estimates.

f. Choose the most suitable option.

g. Implement the solution and monitor the results.

a. Customer Experience – It is an approach to business that focuses mainly on customer satisfaction.

b. Brand – It is the identity and reputation of products and services.

d. Talent – is a natural ability like leadership, engineering, design, and marketing.

e. Know-how – is the practical knowledge that enables an effective work approach.

f. Intellectual Property - trade secrets, trademarks, copyright, designs, and patents

b. Variable Costs - Costs that change depending on the result.

m. Private Costs - The expenses you incur.

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