Question

All of the following are usually included in an engineering economic analysis except:

A- Variable Costs

B- Total Revenue

C- Sunk Costs

D- Fixed Costs

*Please explain why*

Answer 1

Option C.

• Sunk costs are those costs that are incurred before in the past even before the project has started and hence these costs cannot be recovered by the firm's.
• While variable costs, fixed costs and the Total revenue are incurred and calculated at every point of time when a project analysis is in place.
• Hence, Sunk costs are usually not included in an engineering economic analysis.