Fixed cost: such as rent, utility cost, administration costs

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Presentation transcript:

Fixed cost: such as rent, utility cost, administration costs Chap 2: Fixed cost: such as rent, utility cost, administration costs Variable cost: such as labor, material costs Total cost = fixed cost + variable cost Average cost = total cost / number of units Marginal cost: cost of additional unit of production Breakeven point: level of production at which total cost is equal to total revenue (profit region, loss region) Incremental cost: difference between cash flow of two alternatives Book cost: cost effects from past decisions that are recorded “in the accounting books”. Cash cost: cash transactions Learning curve: indicates relationship between efficiency of Performance and task repetition. EGR 403, Feb 04

EGR 403, Feb 04

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