ExamFOCUS Study Notes & Review Questions 2013
According to AACE
International, cost engineering is defined as the area of engineering
practice where engineering judgment
and experience are used in the application of scientific principles and
techniques to problems of cost estimating, cost control, business
planning and management science, profitability analysis, project
management, and planning and scheduling..
CCE Certification requires that an individual have an education and/or
work experience in a
related field (more precisely, a field that emphasizes cost management). The candidate must demonstrate acquired knowledge through
a written exam and, for the CCE candidate only, preparing an acceptable
paper on a total cost management subject.
A 70% passing grade is required on a
7-hour exam for the CCE designation to be earned. This CCE exam has 4 parts. They are:
Part One - Supporting Skills and
Part Two - Cost Estimating and Control
Part Three - Project Management
Part Four - Economic Analysis
The CCE MC based exam has a
coverage which is highly extensive - in fact so extensive that I
wouldn't recommend taking the exam until you are fully drilled on the
relevant topics. A simple outline of terms just wouldn't help.
Many CCE candidates are
experienced professional who have been in the field of cost engineering for
years, that they know most of the practical how-tos, and all they need
is to learn the principles, concepts and science that are behind the
practical techniques. Hundreds of pages worth of information is quite
overwhelming for these busy professionals.
ExamFOCUS Study Notes build a solid focus while revisiting key
examination topics. Whether you are just starting to study, cramming at
the last minute, or simply looking to refresh, this could prove to be a
To succeed in the exam you need to get yourself truly familiar with
the most important information by going through sufficiently focused revision. This is
where we fill the gap - you may think of our product as the unofficial supplement to
the regular training class, or you may view it as a standalone module with a focus on
building up your exam readiness.
As an effective learning
aid implemented in the format of study notes, the ExamFOCUS CCE Study
Notes package is designed to present information in an
easy-to-understand, conversational format. Notes are well-written, technically accurate
and completely representative of the key information covered by the
You may download
the TOC of this study notes by clicking on the link below:
Study Notes TOC in PDF format
SAMPLE TEXT on Cost Behavior
Costs are usually classified based on how they behave when there are
more units to get produced. Cost behavior may be based on the total cost
or the cost for a single unit. When thinking about how a cost behaves,
you should think about the total cost whenever possible. Total fixed
costs would stay the same in total even if more items are produced and
sold. Total variable costs, on the contrary, would increase when more
items are produced, and would decrease when fewer items are produced.
Product costs would include all costs that are deem necessary to get
products/services delivered. For companies that manufacture products,
this would include materials, labor, and manufacturing overhead.
Materials and labor are variable costs because the total cost of
materials and the total costs of labor would increase when more products
are produced. Some manufacturing overhead costs are variable costs,
while some others are fixed.
When measuring product costs, full costing is also known as absorption
costing or GAAP costing. It is required by GAAP for external reporting
purposes. Under full costing, inventory costs will have to include ALL
product costs, both fixed and variable. Variable costing, in contrast,
is primarily used for internal reporting and management purposes only.
Under it, inventory costs would only include variable product costs. In
other words, materials, labor and variable manufacturing overhead costs
are included. However, as period costs such as administrative and
selling costs are never part of the inventory, they would never be
considered as product costs.
Important: Variable Costing is also called Direct Costing. It is an
alternative method that treats direct manufacturing costs and variable
manufacturing overhead as product costs. It also treats fixed
manufacturing overhead as a period expense. It makes the assumption that
fixed costs are unrelated to production as these costs are incurred in
the short-run even when nothing is produced.
SAMPLE TEXT on Cost Estimation
To estimate cost behavior, you generally need to make certain
assumptions. Firstly, the number of units produced is equal to the
number of units sold. Secondly, the cost behavior needs to be linear.
And thirdly, the level of activity must occur within the relevant range.
A relevant range refers to the range of activity within which cost
behavior holds true. It is basically the normal range of production or
sales that can be expected. Total variable costs tend to vary in direct
proportion to volume. Total variable cost will turn to zero when no
units are produced. Total fixed costs would stay the same in total as
volume fluctuates. More units produced would have no effect on the total
amount of total fixed costs.
Unit fixed costs may vary inversely when more or fewer units are
produced and sold. If total production and sales increase, unit fixed
costs would decrease. On the contrary, if total production and sales
decrease, unit fixed costs would increase.
Fixed costs may be broken into discretionary and committed costs based
on whether one can quickly eliminate a particular fixed cost in the
short run. With Discretionary Fixed Costs, one may easily change
discretionary fixed costs in the short run by spending more or less on
the particular cost item. Generally, in the short run a business will
not be adversely affected if costs such as these got eliminated. On the
other hand, one would not be able to easily change committed fixed costs
in the short run.
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