Cost Estimation and Management Decision Areas in Business
Classified in Mathematics
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Fixed Costs
Fixed costs are not a function of the output. They do not vary with the output. They cannot be avoided until the operation of the firm is closed. They are contractual (prime).
Recurring and Non-Recurring Costs
- Recurring: Predetermined expenses for running the business, e.g., salaries, repairs, maintenance.
- Non-Recurring: Not predetermined, regular budgeting, e.g., repair of a machine. Sometimes it is also planned.
Cost Estimation
Cost estimation is the process of finding an estimate, an approximation of a value, which will be used for some purpose, though it is completely uncertain and unstable. Estimation is typically a value from statistics used to estimate the value of a corresponding population parameter.
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