Cost Estimation

Cost Estimation
Cost estimation is the process of predicting the cost of a project, product, or service by assessing the unit costs of direct costs and overheads for the purposes of planning, control, and pricing.
Decommissioning Costs
Decommissioning costs represent the expenditures associated with ending an operation or activity, which might include dismantling infrastructure such as an oil rig and restoring the affected environment.
Gaming
The process of two or more participants attempting to reach conflicting objectives or goals. The process of bidding for contracts is a game. Logically, each participant would bid estimated costs plus some amount for profit. Since only one contract would be awarded, the outcome depends jointly on the actions of all bidders.
Linear Cost Function
A linear cost function captures cost behavior that, when plotted on a graph against activity levels, results in a straight line. This function simplifies the relationship between costs and activity levels, essential for cost estimation and budgeting in business.
Steady-Growth Method
A subscription-based business modeling technique that estimates the cost and impact on profitability of building a rate base over time using various sources of business.
Strategic Misrepresentation
In planning and budgeting, strategic misrepresentation involves knowingly understating costs and overstating benefits to secure project approval. Distinct from optimism bias, it is a deliberate policy often justified as part of the negotiation process.

Accounting Terms Lexicon

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