Engineered costs have a clear input–output relationship. In other words, the benefit of a given cost is measurable. For example, if it takes 10 hours to pro-duce 10 boxes of product A in the factory, then we have a clear output benefit (1 box) for the cost of each hour of input.
Discretionary costs do not have a clear input–output relationship. Here, the input cost is clear but the output benefit is unclear. For example, the cost of the contract cleaners who clean the factory is clear, but the benefit they pro-duce is not easily quantifiable.