Pick up the correct method adopted for developing the approximate

By Aina Parasher|Updated : July 7th, 2022

Pick up the correct method adopted for developing the approximate or conceptual estimates from the following:

  1. Base unit method
  2. Cost per function method
  3. Cost per square metre
  4. Cost per linear unit
  5. All of these

Answer: E. All of these

All of these are correct method adopted for developing the approximate or conceptual estimates.

Solution

Methods for developing approximate or conceptual estimates are:

Base unit method:

  • By this method, the cost of the structure is found out by multiplying the total number of units by a unit rate of each item.
  • In case of schools, the unit is considered to be 'one student', while in the case of a hospital, the unit is 'one bed'.
  • The unit rate is calculated by dividing the actual cost expended or the price of a comparable structure in the neighbourhood by the number of units.

Cost per function method:

  • A cost function is a mathematical formula used for calculating the total cost of production given a specific amount of items produced.
  • The general form of the cost function formula is C(x) = F + V(x)

Where,

F : total fixed costs

V : variable cost

x : number of units

C(x) : total production cost

Cost per square metre:

Cost per square meter is found out by dividing the total cost of a property by the total number of square meters in the property.

Cost per linear unit:

  • A linear cost function is a mathematical method to find out the total costs associated with a specific amount of production.
  • The linear cost function can be found out by adding the variable cost, which is the cost per unit multiplied by the units produced, to the fixed cost.

All of these are correct method adopted for developing the approximate or conceptual estimates.

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