Engineering method-cost estimation method, Managerial Accounting

Engineering method

These methods are based on the use of engineering analysis of technological relationship between inputs and outputs e.g. method studies and time and motion studies.

The procedure in such a study is to make an analysis based on direct observation of the underlying physical quantities required for an activity and then to convert the final result into cost estimate.

This method is useful for estimating costs of repetitive processes where input and output relationship is clearly defined e.g. the cost associated with direct substances, direct labor and machine time.

Posted Date: 12/4/2012 7:38:23 AM | Location : United States

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