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Learning Objectives
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Approaches
Describe different approaches to cost estimation.
Cost indexes
Use a cost index to estimate present cost based on historic data.
Cost-capacity equations
Estimate the cost of a component, system, or plant by using a cost-capacity equation.
Factor method
Estimate total plant cost using the factor method.
Indirect cost rates and allocation
Allocate indirect costs using traditional indirect cost rates.
ABC allocation
Allocate indirect costs using the Activity-Based Costing (ABC) method.





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