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Engineering Economy, 5/e
Leland Blank, Texas A&M University
Anthony Tarquin, University of Texas - El Paso
Cost Estimation and Indirect Cost Allocation

Learning Objectives

Purpose: Make cost estimates and include the dimension of indirect cost allocation in an engineering economy study.

This chapter will help you learn to:


1. Approaches

Describe different approaches to cost estimation.

2. Cost indexes

Use a cost index to estimate present cost based on historic data.

3. Cost-capacity equations

Estimate the cost of a component, system, or plant by using a cost-capacity equation.

4. Factor method

Estimate total plant cost using the factor method.

5. Indirect cost rates and allocation

Allocate indirect costs using traditional indirect cost rates.

6. ABC allocation

Allocate indirect costs using the Activity-Based Costing (ABC) method.








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