Engineering Eco tags

Profit

Total Revenue > Total Costs.

Loss

Total Revenue < Total Costs.

Breakeven

Total Revenue = Total Costs.

Fixed Cost

Cost that does not change, regardless of output or activities.

Variable Cost

Cost that change appreciably with fluctuations in business activity.

Marginal Cost

The variable cost of producing one additional unit, used to decide if another unit should be made or purchased, etc.

Average Cost

Total cost divided by the number of units produced.

Sunk Cost

Money that is spent as the result of a past decision. These are unrecoverable and not relevant to most future decisions.

Opportunity Cost

Cost of using a resource (Time, Money, Materials) for one activity instead of another. Think of this as forgone benefits.

Recurring Cost

Known cost that is anticipated and occurs at regular intervals. (Ex: Annual Maintenance Costs)

Nonrecurring Cost

One-of-a-kind expenses that occur at irregular intervals. May be difficult to plan for or anticipate. (Ex: Cost of a new machine)

Incremental Cost

The difference between the costs of two alternatives. Some costs will be the same between alternatives with multiple variables, this quantifies the bottom-line difference.

Internal Cost

Cost directly incurred from producing a good and service. (Ex: Materials, Labor, Overhead)

External Cost

Costs not directly incurred from producing a product or service, but related. (Ex: Environmental Impacts, Social Impacts, Cost of Disposal/Decommissioning)

Life Cycle Cost

1. The summation of costs over the entire life cycle of the product.

Cash Cost

Payment or cash flow. Money from one person to another. (Ex: Buying a Car, Paying Rent, Buying Groceries)

Book Cost

Transaction cost recorded in an accounting book. (Ex: Depreciation of an asset)