Chemical Engineering Plant Economics MCQs : This section focuses on the "Chemical Engineering Plant Economics". These Multiple Choice Questions (MCQs) should be practiced to improve the Chemical Engineering Plant Economics skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations.
Question 1
"Break-even point" is the point of intersection of
A. fixed cost and total cost.
B. total cost and sales revenue.
C. fixed cost and sales revenue.
D. none of these.
Question 2
__________ method for profitability evaluation of a project does not account for investment cost due to land.
A. Net present worth
B. Pay out period
C. Discounted cash flow
D. Rate of return on investment
Question 3
__________ of depreciation calculation accounts for the interest on investement.
A. Straight line method
B. Declining balance
C. both (a) and (b)
D. neither (a) nor (b).
Question 4
__________ taxes are based on gross earnings.
A. Property
B. Excise
C. Income
D. Capital gain
Question 5
A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs.
A. 300
B. 600
C. 800
D. 1000
Question 6
A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as
A. perpetuity
B. capital charge factor
C. annuity
D. future worth
Question 7
Accumulated sum at the end of 5 years, if Rs. 10000 is invested now at 10% interest per annum on a compound basis is Rs.
A. 15000
B. 16105
C. 18105
D. 12500
Question 8
Annual depreciation cost are not constant when, the __________ method of depreciation calculation is used.
A. straight line
B. sinking fund
C. present worth
D. declining balance.
Question 9
Annual depreciation costs are constant, when the __________ method of depreciation calculation is used.
A. declining balance
B. straight line
C. sum of the years digit
D. none of these
Question 10
Construction expenses are roughly __________ percent of the total direct cost of the plant.
A. 2
B. 10
C. 30
D. 50
Question 11
Cost incurred towards __________ in a chemical plant is a component of the utilities cost.
A. water supply
B. running a control laboratory
C. property protection
D. medical services
Question 12
Cost of instrumentation in a modern chemical plant ranges from __________ percent of the total plant cost.
A. 5 to 10
B. 20 to 30
C. 40 to 50
D. 60 to 70
Question 13
Direct costs component of the fixed capital consists of
A. contingencies
B. onsite and offsite costs
C. labour costs
D. raw material costs
Question 14
Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.
A. 10 to 20
B. 35 to 45
C. 55 to 65
D. 70 to 80
Question 15
Fixed charges for a chemical plant does not include the
A. interest on borrowed money.
B. rent of land and buildings.
C. property tax, insurance and depreciation.
D. repair and maintenance charges.
Question 16
For a given fluid, as the pipe diameter increases, the pumping cost
A. decreases.
B. increases.
C. remains the same.
D. may increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian.
Question 17
Gross earning is equal to the total income minus
A. total product cost
B. fixed cost
C. income tax
D. none of these
Question 18
If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be __________ percent.
A. 10
B. 20
C. >20
D. < 20
Question 19
In a manufacturing industry, break even point occurs, when the
A. total annual rate of production equals the assigned value.
B. total annual product cost equals the total annual sales.
C. annual profit equals the expected value.
D. annual sales equals the fixed cost.
Question 20
In an ordinary chemical plant, electrical installation cost may be about
A. 10-15% of purchased equipment cost.
B. 3-10% of fixed capital investment.
C. either (a) or (b).
D. neither (a) nor (b).
Question 21
In declining balance method of depreciation calculation, the
A. value of the asset decreases linearly with time.
B. annual cost of depreciation is same every year.
C. annual depreciation is the fixed percentage of the property value at the beginning of the particular year.
D. none of these.
Question 22
In which of the electric power generation system, the operating cost is minimum ?
A. Thermal
B. Nuclear
C. Hydroelectric
D. Fast breeder reactor
Question 23
Most chemical plants use an initial working capital amounting to 10-20% of the total capital investment. But this percentage may increase to __________ percent in case of seasonal products manufacturing plant.
A. 30
B. 50
C. 75
D. 95
Question 24
Nominal and effective interest rates are equal, when the interest is compounded
A. quarterly
B. semi-annually
C. annually
D. in no case, they are equal
Question 25
Operating profit of a chemical plant is equal to
A. profit before interest and tax i.e., net profit + interest + tax
B. profit after tax plus depreciation
C. net profit + tax
D. profit after tax
Question 26
Out of the following, the depreciation calculated by the __________ method is the maximum.
A. diminishing balance
B. straight line
C. sum of the years digit
D. sinking fund
Question 27
Payback period
A. and economic life of a project are the same.
B. is the length of time over which the earnings on a project equals the investment.
C. is affected by the variation in earnings after the recovery of the investment.
D. all (a), (b) and (c).
Question 28
Personnel working in the market research group is reponsible for the job of
A. equipment selection.
B. product evaluation.
C. equipment design.
D. cost estimation.
Question 29
Pick out the wrong statement.
A. The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment.
B. Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost.
C. Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment.
D. In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR).
Question 30
Pick out the wrong statement.
A. Net worth means paid up share capital and reserve & surplus (i.e. shareholders equity).
B. Return on equity = profit after tax/net worth.
C. Working capital turn over ratio = sales/net working capital.
D. Total cost of production is more than net sales realisation (NSR) at break even point.
Question 31
Pick out the wrong statement.
A. Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner's contribution i.e., debt-equity ratio = total debt/net worth.
B. Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt).
C. Working capital = current assets + current liability.
D. Turn over = opening stock + production closing stock.
Question 32
Pick out the wrong statement.
A. Gross revenue is that total amount of capital received as a result of the sale of goods or service.
B. Net revenue is the total profit remaining after deducting all costs excluding taxes.
C. The ratio of immediately available cash to the total current liabilities is known as the cash ratio.
D. Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval.
Question 33
Pick out the wrong statement.
A. Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes.
B. A cost index is merely a number for a given year showing the cost at that time relative to a certain base year.
C. Turn over ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment.
D. Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary.
Question 34
Scheduling provides information about the
A. proper utilisation of machines.
B. means to minimise idle time for machines.
C. time of completion of job.
D. time of starting of job and also about how much work should be completed during a particular period.
Question 35
'Six-tenth factor' rule is used for estimating the
A. equipment installation cost.
B. equipment cost by scaling.
C. cost of piping.
D. utilities cost.
Question 36
The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the
A. initial cost.
B. book value at the end of (n - 1)th year,
C. depreciation during the (n - 1)th year.
D. difference between initial cost and salvage value.
Question 37
The economic life of a large chemical process plant as compared to a small chemical plant is
A. only slightly more
B. much more
C. slightly less
D. almost equal
Question 38
The inventory of raw materials included in the working capital is usually about __________ months supply of raw materials valued at delivery prices.
A. one
B. three
C. six
D. twelve
Question 39
The payback method for the measurement of return on investment
A. gives a correct picture of profitability.
B. underemphasises liquidity.
C. does not measure the discounted rate of return.
D. takes into account the cash inflows after the recovery of investments.
Question 40
The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.
A. 0.1 to 1
B. 1 to 2
C. 10 to 20
D. 50 to 60
Question 41
The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is
A. 15%
B. 10%
C. 1.50%
D. 150%
Question 42
Utilities cost in the operation of chemical process plant comes under the
A. plant overhead cost
B. fixed charges
C. direct production cost
D. general expenses
Question 43
'Utilities' in a chemical process plant includes compressed air, steam, water, electrical power, oxygen, acetylene, fuel gases etc. Utility costs for ordinary chemical process plants ranges roughly from __________ percent of the total product cost.
A. l to 5
B. 10 to 20
C. 25 to 35
D. 35 to 45
Question 44
Which of the following elements is not included in the scope of market analysis ?
A. Competition from other manufactures.
B. Product distribution.
C. Opportunities
D. Economics
Question 45
Which of the following is a component of working capital investment ?
A. Utilities plants.
B. Maintenance and repair inventory.
C. Process equipments.
D. Depreciation.
Question 46
Which of the following is not a component of depreciation cost ?
A. Repairs and maintenance cost.
B. Loss due to obsolescence of the equipment.
C. Loss due to decrease in the demand of product.
D. Loss due to accident/breakdown in the machinery.
Question 47
Which of the following is not a component of working capital ?
A. Raw materials is stock.
B. Finished products in stock.
C. Transportation facilities.
D. Semi-finished products in the process.
Question 48
Which of the following is the costliest material of construction used in pressure vessel construction ?
A. Low alloy steel
B. Lead
C. Titanium
D. High alloy steel
Question 49
Which of the following relationship is not correct is case of a chemical process plant ?
A. Manufacturing cost = direct product cost + fixed charges + plant overhead costs
B. General expenses = administrative expenses + distribution & marketing expenses
C. Total product cost = manufacturing cost + general expenses
D. Total product cost = direct production cost + plant overhead cost.
Question 50
The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the
A. Initial cost
B. Book value at the end of (n - 1)th year
C. Depreciation during the (n - 1)th year
D. Difference between initial cost and salvage value
Question 51
Which of the following is not a current asset of a chemical company?
A. Inventories
B. Marketable securities
C. Chemical equipments
D. None of these
Question 52
In declining balance method of depreciation calculation, the
A. Value of the asset decreases linearly with time
B. Annual cost of depreciation is same every year
C. Annual depreciation is the fixed percentage of the property value at the beginning of the particular year
D. None of these
Question 53
Generally, income taxes are based on the
A. Total income
B. Gross earning
C. Total product cost
D. Fixed cost
Question 54
With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project
A. Decreases
B. Increases
C. Increases linearly
D. Remains constant
Question 55
Which of the following relationship is not correct is case of a chemical process plant?
A. Manufacturing cost = direct product cost + fixed charges + plant overhead costs
B. General expenses = administrative expenses + distribution & marketing expenses
C. Total product cost = manufacturing cost + general expenses
D. Total product cost = direct production cost + plant overhead cost
Question 56
Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant?
A. Cash reserve
B. Rate of return on investment
C. Payout period
D. Discounted cash flow based on full life performance
Question 57
In a chemical process plant, the total product cost comprises of manufacturing cost and the
A. General expenses
B. Overhead cost
C. R & D cost
D. None of these
Question 58
Factory manufacturing cost is the sum of the direct production cost
A. Fixed charges and plant overhead cost
B. And plant overhead cost
C. Plant overhead cost and administrative expenses
D. None of these
Question 59
Which of the following does not come under the sales expenses for a product of a chemical plant?
A. Advertising
B. Warehousing
C. Legal fees
D. Customer service
Question 60
According to six-tenths-factor rule, if the cost of a given unit at one capacity is known, then the cost of similar unit with '' times the capacity of the first unit is approximately equal to __________ times the cost of the initial unit.
A. N
B. N0.6
C. N0.4
D. √n
Question 61
An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be
A. 1000 (1 + 0.1/4)20
B. 1000 (1 + 0.1)20
C. 1000 (1 + 0.1/4)5
D. 1000 (1 + 0.1/2)5
Question 62
Purchased cost of equipments for a chemical process plant ranges from __________ percent of the fixed capital investment.
A. 10 to 20
B. 20 to 40
C. 45 to 60
D. 65 to 75
Question 63
Cost of piping in a fluid processing unit (e.g., distillation) of a chemical process plant is about __________ percent of the fixed capital investment.
A. 4
B. 13
C. 22
D. 34
Question 64
If 'S' is the amount available after 'n' interest periods for an initial principal 'P' with the discrete compound interest rate 'i', the present worth is given by
A. (1 + i)n/S
B. S/(1 + i)n
C. S/(1 + in)
D. S/(1 + n)i
Question 65
Which of the following is the cheaptest material of construction for the storage of sodium hydroxide upto a concentration of 75%?
A. Stainless steel
B. Plain carbon steel
C. Nickel
D. Copper
Question 66
Depreciation is __________ in profit with time.
A. Decrease
B. Increase
C. No change
D. None of these
Question 67
Following the six-tenth factor rule, if a log-log plot of capacity of the equipment vs. cost of the equipment is made, then a straight line is obtained, whose slope is equal to
A. 0.1
B. 0.6
C. 0.2
D. 0.8
Question 68
In a manufacturing industry, break even point occurs, when the
A. Total annual rate of production equals the assigned value
B. Total annual product cost equals the total annual sales
C. Annual profit equals the expected value
D. Annual sales equals the fixed cost
Question 69
An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the pay back time?
A. 5 years
B. 7 years
C. 12 years
D. 10 years
Question 70
For a typical project, the cumulative cash flow is zero at the
A. End of the project life
B. Break even point
C. Start up
D. End of the design stage
Question 71
Fixed charges for a chemical plant does not include the
A. Interest on borrowed money
B. Rent of land and buildings
C. Property tax, insurance and depreciation
D. Repair and maintenance charges
Question 72
Which of the following is not a component of working capital?
A. Raw materials is stock
B. Finished products in stock
C. Transportation facilities
D. Semi-finished products in the process
Question 73
Functional depreciation of an equipment is the measure of decrease in its value due to its
A. Ageing
B. Wear and tear
C. Obsolescence
D. Breakdown or accident
Question 74
The value of a property decreases __________ with time in straight line method of determining depreciation.
A. Linearly
B. Non-linearily
C. Exponentially
D. Logarithmically
Question 75
Depreciation
A. Costs (on annual basis) are constant when the straight line method is used for its determination
B. Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time
C. Does figure in the calculation of income tax liability on cash flows from an investment
D. All of the above
Question 76
The amount of compounded interest during 'n' interest periods is
A. P[(1+i)n-1)]
B. P(1 + i)n
C. P(1 - i)n
D. P(1 + in)
Question 77
Which of the following is the costliest source of getting hydrogen on commercial scale for the manufacture of nitrogeneous fertiliser?
A. Coal gasification
B. Steam reforming of naphtha
C. Alectrolysis of water
D. Coke oven gas
Question 78
Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method?
A. Multiple straight line method
B. Sinking fund method
C. Declining balance method
D. Sum of the years digit method
Question 79
Maximum production start up cost for making a chemical plant operational is about __________ percent of the fixed capital cost.
A. 1
B. 5
C. 10
D. 30
Question 80
Utilities' in a chemical process plant includes compressed air, steam, water, electrical power, oxygen, acetylene, fuel gases etc. Utility costs for ordinary chemical process plants ranges roughly from __________ percent of the total product cost.
A. 1 to 5
B. 10 to 20
C. 25 to 35
D. 35 to 45
Question 81
Pick out the wrong statement.
A. The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment
B. Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost
C. Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment
D. In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)
Question 82
A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs.
A. 40096
B. 43196
C. 53196
D. 60196
Question 83
For a given fluid, as the pipe diameter increases, the pumping cost
A. Decreases
B. Increases
C. Remains the same
D. May increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian
Question 84
The ratio of gross annual sales to the fixed capital investment is termed as the __________ ratio.
A. Cash reserve
B. Capital
C. Turnover
D. Investment
Question 85
A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.
A. 121
B. 110
C. 97
D. 91
Question 86
Which of the following is a component of working capital investment?
A. Utilities plants
B. Maintenance and repair inventory
C. Process equipments
D. Depreciation
Question 87
Which of the following is not a component of the fixed capital for a chemical plant facility?
A. Raw materials inventory
B. Utilities plants
C. Process equipment
D. Emergency facilities
Question 88
Which of the following is not a component of the working capital for a chemical process plant?
A. Product inventory
B. In-process inventory
C. Minimum cash reserve
D. Storage facilities
Question 89
Optimum economic pipe diameter for fluid is determined by the
A. Viscosity of the fluid
B. Density of the fluid
C. Total cost considerations (pumping cost plus fixed cost of the pipe)
D. None of these
Question 90
In which of the electric power generation system, the operating cost is minimum?
A. Thermal
B. Nuclear
C. Hydroelectric
D. Fast breeder reactor
Question 91
Effective and nominal interest rates are equal, when the interest is compounded
A. Annually
B. Fortnightly
C. Monthly
D. half-yearly
Question 92
Which of the following ceramic packing materials is the costliest of all?
A. Berl saddles
B. Raschig rings
C. Pall rings
D. Intalox saddles
Question 93
Pick out the correct statement.
A. Difference between income and expense is termed as gross revenue
B. Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date
C. Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment
D. Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale
Question 94
Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from
A. 1.2 to 1.4
B. 2.5 to 2.7
C. 4.2 to 4.4
D. 6.2 to 6.4
Question 95
In an ordinary chemical plant, electrical installation cost may be about
A. 10-15% of purchased equipment cost
B. 3-10% of fixed capital investment
C. Either A or B
D. Neither A nor B
Question 96
Manufacturing cost in a chemical company does not include the
A. Fixed charges
B. Plant overheads
C. Direct products cost
D. Administrative expenses
Question 97
Which of the following is not a component of depreciation cost?
A. Repairs and maintenance cost
B. Loss due to obsolescence of the equipment
C. Loss due to decrease in the demand of product
D. Loss due to accident/breakdown in the machinery
Question 98
A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.
A. Current asset
B. Current liability
C. Long term debt
D. Profit
Question 99
Pick out the wrong statement.
A. Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes
B. A cost index is merely a number for a given year showing the cost at that time relative to a certain base year
C. Turn over ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment
D. Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary
Question 100
Relative cost of chemical process plants in India is about __________ percent more than the similar plants in U.S.A.
A. 15
B. 35
C. 55
D. 75
Question 101
The amount of simple interest during 'n' interest period is (where, i = interest rate based on the length of one interest period, p = principal)
A. P.i.n.
B. P(1 + i.n)
C. P(1 + i)n
D. P(1 - i.n)
Question 102
P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be
A. (P - S)/n
B. 1 - (P/S)1/m
C. M/n x (P - S)
D. 2(n - m + 1)/n(n + 1) x (P - S)
Question 103
Profit is equal to revenue minus
A. Book value
B. Total cost
C. Operating cost
D. None of these
Question 104
A shareholder has __________ say in the affairs of company management compared to a debenture holder.
A. More
B. Less
C. Same
D. No
Question 105
Chemical engineering plant cost index is used for finding the present cost of a particular chemical plant, if the cost of similar plant at some time in the past is known. The present cost of the plant = original cost x (index value/(index value at original cost was obtained)The most major component of this cost index is
A. Fabricated equipment and machinery
B. Process instruments and control
C. Pumps and compressor
D. Electrical equipments and material
Question 106
A balance sheet for an industrial concern shows
A. The financial condition at any given time
B. Only current assets
C. Only fixed assets
D. Only current and fixed assets
Question 107
Pick out the wrong statement.
A. Gross revenue is that total amount of capital received as a result of the sale of goods or service
B. Net revenue is the total profit remaining after deducting all costs excluding taxes
C. The ratio of immediately available cash to the total current liabilities is known as the cash ratio
D. Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval
Question 108
Effluent treatment cost in a chemical plant is categorised as the __________ cost.
A. Fixed
B. Overhead
C. Utilities
D. Capital
Question 109
In financial accounting of a chemical plant, which of the following relationship is invalid?
A. Assets = equities
B. Assets = liabilities + net worth
C. Total income = costs + profits
D. Assets = capital
Question 110
Personnel working in the market research group is reponsible for the job of
A. Equipment selection
B. Product evaluation
C. Equipment design
D. Cost estimation
Question 111
Payback period
A. And economic life of a project are the same
B. Is the length of time over which the earnings on a project equals the investment
C. Is affected by the variation in earnings after the recovery of the investment
D. All of the above
Question 112
Pick out the wrong statement.
A. Net worth means paid up share capital and reserve & surplus (i.e. shareholders equity)
B. Return on equity = profit after tax/net worth
C. Working capital turn over ratio = sales/net working capital
D. Total cost of production is more than net sales realisation (NSR) at break even point
Question 113
Which of the following is the costliest material of construction used in pressure vessel construction?
A. Low alloy steel
B. Lead
C. Titanium
D. High alloy steel
Question 114
Scheduling provides information about the
A. Proper utilisation of machines
B. Means to minimise idle time for machines
C. Time of completion of job
D. Time of starting of job and also about how much work should be completed during a particular period
Question 115
__________ of depreciation calculation accounts for the interest on investement.
A. Straight line method
B. Declining balance
C. Both A and B
D. Neither A nor B
Question 116
Pick out the wrong statement.
A. Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner's contribution i.e., debt-equity ratio = total debt/net worth
B. Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt)
C. Working capital = current assets + current liability
D. Turn over = opening stock + production closing stock
Question 117
Annual depreciation cost are not constant when, the __________ method of depreciation calculation is used.
A. Straight line
B. Sinking fund
C. Present worth
D. Declining balance
Question 118
The payback method for the measurement of return on investment
A. Gives a correct picture of profitability
B. Underemphasises liquidity
C. Does not measure the discounted rate of return
D. Takes into account the cash inflows after the recovery of investments
Question 119
Fixed capital investment of a chemical plant is the total amount of money needed to supply the necessary plant and manufacturing facilities plus the working capital for operation of the facilities. Which of the following components of fixed capital investment requires minimum percentage of it?
A. Electrical installation cost
B. Equipment installation cost
C. Cost for piping
D. Equipment insulation cost
Question 120
Break-even point is the point of intersection of
A. Fixed cost and total cost
B. Total cost and sales revenue
C. Fixed cost and sales revenue
D. None of these
Question 121
The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities.
A. Cash ratio
B. Net working capital
C. Current ratio
D. Liquids assets
Question 122
Gantt chart (or Bar chart) is helpful in
A. Efficient utilisation of manpower and machines
B. Preparing production schedule
C. Efficient despatching of products
D. Inventory control
Question 123
Optimum number of effects in a multiple effect evaporator is decided by the
A. Cost benefit analysis
B. Floor area availability
C. Terminal parameters
D. Evaporation capacity required
Question 124
Total product cost of a chemical plant does not include the __________ cost.
A. Market survey
B. Operating labour, supervision and supplies
C. Overhead and utilities
D. Depreciation, property tax and insur-rance
Question 125
__________ of depreciation calculation does not take into account the interest on investments.
A. Present worth method
B. Sinking fund method
C. Sum of the years-digits method
D. All of the above
Question 126
Which of the following elements is not included in the scope of market analysis?
A. Competition from other manufactures
B. Product distribution
C. Opportunities
D. Economics
Question 127
If an amount R is paid at the end of every year for 'n' years, then the net present value of the annuity at an interest rate of i is
A. R[((1 + i)n - 1)/i]
B. [((1 + i)n - 1)/i(1 + i)n]
C. R(1 + i)n
D. R/(1 + i)n
Question 128
Expenditure on research and development (R & D) is categorised as the __________ , while making an estimate of the total product cost for a chemical plant.
A. Overhead cost
B. Fixed expenses
C. General expenses
D. Direct production cost
Question 129
Pick out the wrong statement.
A. Gross margin = net income - net expenditure
B. Net sales realisation (NSR) = Gross sales - selling expenses
C. At break even point, NSR is more than the total production cost
D. Net profit = Gross margin - depreciation - interest
Question 130
Six-tenth factor' rule is used for estimating the
A. Equipment installation cost
B. Equipment cost by scaling
C. Cost of piping
D. Utilities cost
Question 131
An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the
A. Manufacturing cost
B. Depreciation by sinking fund method
C. Discrete compound interest
D. Cash ratio
Question 132
The 'total capital investment' for a chemical process plant comprises of the fixed capital investment and the
A. Overhead cost
B. Working capital
C. Indirect production cost
D. Direct production cost