Engineering Economics and Costing

Course Code (Credit):

CUTM1012 (2-0-1)

Course Objectives:

  • Facilitate students to understand the basics of Economics and its application in the field of engineering.
  • Enable students to understand the concepts of the time value of money and techniques for evaluation of engineering project.
  • Equip students with the skills required to understand cost statements/records of the product and its effect on decision making.

Learning Outcomes:

  • Upon successful completion of this course, the student will be able to:
  • Understand the microeconomics concepts related to business and its impact on enterprise.
  • Develop an awareness and understanding time value of money and techniques for evaluation of engineering project
  • Understand and apply cost concepts to analyse common business management decisions such as pricing a product and services.

Course Syllabus:

Module I:

Engineering Economics – Nature and scope, General concepts on micro & macro economics. The Theory of demand, Demand function, Law of demand and its exceptions, Elasticity of demand, Law of supply and elasticity of supply.

Theory of production, Law of variable proportion, Law of returns to scale.

Module II:

Time value of money: Simple and compound interest, Cash flow diagram, Principle of economic equivalence.

Evaluation of engineering projects: Present worth method, Future worth method, Net present value method, internal rate of return method, Cost-benefit analysis in public projects.

Depreciation: Meaning Causes, Factors affecting depreciation, Methods of providing depreciation, Straight Line Method & Diminishing Balance Method.

Module III:

Cost concepts, Elements of costs, Preparation of cost sheet, Segregation of costs into fixed and variable costs. Break-even analysis (Simple numerical problems to be solved)

Indian Banking System: Banks: Meaning, nature, characteristic of the Indian banking system, functions of commercial banks, functions of Reserve Bank of India, Overview of Indian Financial System.

Text Books:

  1. Riggs, Bedworth and Randhwa, “Engineering Economics”, McGraw Hill Education India.
  2. D.M. Mithani, Principles of Economics. Himalaya Publishing House

Reference Books:

  1. Sasmita Mishra, “Engineering Economics & Costing “, PHI
  2. Sullivan and Wicks, “ Engineering Economy”, Pearson
  3. R.Paneer Seelvan, “ Engineering Economics”, PHI
  4. Gupta, “ Managerial Economics”, TMH
  5. Lal and Srivastav, “ Cost Accounting”, TMH

Session Plan:

Session Topic Reference Link (if any)
1 Nature and scope, General concepts on micro & macro economics Presentation: Introduction to ME
2 The Theory of demand, Demand function, Law of demand and its exceptions Presentation: Demand Analysis
3 & 4 Elasticity of demand Presentation: Elasticity-Supply and Demand
5 Law of supply SlideShare: Law of Supply
6 Elasticity of supply Presentation: Elasticity-Supply and Demand
7 Theory of production, Law of variable proportion Presentation: Production Theory
8 Law of returns to scale Presentation: LR Production
9 & 10 Project: Assess demand and supply during COVID-19 Class Project
11 Time value of money, Interest concepts Slideshare
Story on Power of Compounding
Simple vs Compound Interest
12 Future Worth & Present Worth Future Worth
Present Worth
13, 14 Case Study and Project on Time Value of Money Case Study
15 Evaluation of engineering projects SlideServe: Project Evaluation
16 Payback, NPV & IRR Payback, NPV, IRR
Benefit-Cost Ratio
17–19 Project Evaluation Case Study PDF Case Study
20 Depreciation SlideShare
YouTube
21 Practice on depreciation methods Practice Problems
22 Cost Concepts & Classification SlideShare
YouTube
23 Preparation of Cost Sheet (Practice) YouTube
24 Cadbury Cost Sheet Case Study SlideShare
YouTube
25–26 Project: Cost Sheet of Small Business Students’ Presentation
27 Marginal costing & break-even analysis SlideShare
YouTube
28 Project using Marginal Costing Students’ Presentation
29 Indian Banking System & Role of Banks SlideShare
YouTube
30 Role & Functions of RBI; SBI Case Study Case Study PDF
YouTube
31 Commercial Banks and their Functions YouTube
32, 33 Overview of Indian Financial System SlideServe
YouTube