chemical engineering plant economics MCQs – Page 2

Practise multiple-choice questions from chemical engineering plant economics for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

chemical engineering plant economics Mcqs
51. In an ordinary chemical plant, electrical installation cost may be about ____________________?
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A. 10-15% of purchased equipment cost

B. Neither A. nor B.

C. Either A. or B.

D. 3-10% of fixed capital investment

52. Scheduling provides information about the_________________?
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A. Time of starting of job and also about how much work should be completed during a

B. Proper utilisation of machines

C. Time of completion of job

D. Means to minimise idle time for machines

E. ticular period</strong>

53. In which of the electric power generation system, the operating cost is minimum ?
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A. Thermal

B. Hydroelectric

C. Fast breeder reactor

D. Nuclear

54. 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 (index value at present/ index value at time original cost was obtained). The most major component of this cost index is____________________?
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A. Process instruments and control

B. Pumps and compressor

C. Fabricated equipment and machinery

D. Electrical equipments and material

55. Which of the following ceramic packing materials is the costliest of all ?
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A. Berl saddles

B. Raschig rings

C. Intalox saddles

D. Pall rings

56. 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 year?s digit method will be____________________?
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A. (m/n) (P S)

B. [2 (n m + 1)/n(n + 1)]. (P S)

C. (P S)/n

D. 1 (P/S)1/m

57. Out of the following, the depreciation calculated by the _____________ method is the maximum?
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A. Diminishing balance

B. Sinking fund

C. Sum of the years digit

D. Straight line

58. Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant ?
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A. Rate of return on investment

B. Payout period

C. Discounted cash flow based on full life performance

D. Cash reserve
59. Operating profit of a chemical plant is equal to___________________?
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A. Profit after tax

B. Net profit + tax

C. Profit before interest and tax i.e., net profit + interest + tax

D. Profit after tax plus depreciation

60. Which of the following does not come under the sales expenses for a product of a chemical plant ?
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A. Legal fees

B. Customer service

C. Warehousing

D. Advertising

61. Pick out the wrong statement?
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A. Net profit = Gross margin depreciation interest

B. Net sales realisation (NSR) = Gross sales selling expenses

C. Gross margin = net income net expenditure

D. At breakeven point, NSR is more than the total production cost
62. 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______________?
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A. 800

B. 600

C. 1000

D. 300

63. If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be ______________ percent ?
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A. 20

B. > 20

C. < 20

D. 10

64. 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 ?
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A. Increases linearly

B. Increases

C. Remain constant

D. Decreases
65. 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 ?
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A. 2.5 to 2.7

B. 4.2 to 4.4

C. 1.2 to 1.4

D. 6.2 to 6.4

66. Annual depreciation costs are constant, when the ______________ method of depreciation calculation is used ?
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A. Sum of the years digit

B. Declining balance

C. Straight line

D. None of these

67. Which of the following elements is not included in the scope of market analysis ?
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A. Competition from other manufactures

B. Product distribution

C. Economics

D. Opportunities

68. In financial accounting of a chemical plant, which of the following relationship is invalid ?
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A. Total income = costs + profits

B. Assets = capital

C. Assets = liabilities + net worth

D. Assets = equities

69. Optimum economic pipe diameter for fluid is determined by the___________________?
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A. Total cost considerations (pumping cost plus fixed cost of the pipe)

B. Viscosity of the fluid

C. Density of the fluid

D. None of these

70. Fixed charges for a chemical plant does not include the____________________?
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A. Repair and maintenance charges

B. Property tax, insurance and depreciation

C. Rent of land and buildings

D. Interest on borrowed money

71. Annual depreciation cost are not constant when, the _____________ method of depreciation calculation is used ?
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A. Present worth

B. Straight line

C. Sinking fund

D. Declining balance
72. Equipment installation cost in a chemical process plant ranges from _______________ percent of the purchased equipment cost ?
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A. 35 to 45

B. 55 to 65

C. 10 to 20

D. 70 to 80

73. Purchased cost of equipments for a chemical process plant ranges from _____________ percent of the fixed capital investment?
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A. 20 to 40

B. 45 to 60

C. 65 to 75

D. 10 to 20

74. Relative cost of chemical process plants in India is about ______________ percent more than the similar plants in U.S.A ?
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A. 55

B. 35

C. 75

D. 15

75. ____________ taxes are based on gross earnings ?
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A. Excise

B. Income

C. Capital gain

D. Property

76. Direct costs component of the fixed capital consists of _____________________?
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A. Contingencies

B. Onsite and offsite costs

C. Raw material costs

D. Labour costs

77. Total product cost of a chemical plant does not include the ______________ cost?
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A. Overhead and utilities

B. Operating labour, supervision and supplies

C. Depreciation, property tax and insurance

D. Market survey
78. 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 _____________?
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A. 60,196

B. 43,196

C. 40,096

D. 53,196

79. 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?
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A. 50

B. 95

C. 75

D. 30

80. The amount of compounded interest during n interest periods is_________________?
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A. p(1 + in)

B. p(1 + i)n

C. p[(1+i)n 1)]

D. p(1 i)n

81. Gross earning is equal to the total income minus___________________?
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A. Income tax

B. Total product cost

C. Fixed cost

D. None of these

82. Which of the following is not a component of depreciation cost ?
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A. Loss due to obsolescence of the equipment

B. Loss due to accident/breakdown in the machinery

C. Repairs and maintenance cost

D. Loss due to decrease in the demand of product

83. In declining balance method of depreciation calculation, the _____________________?
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A. Annual depreciation is the fixed percentage of the property value at the beginning of the

B. None of these

C. Value of the asset decreases linearly with time

D. ticular year</strong>

E. Annual cost of depreciation is same every year

84. 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?
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A. n0.6

B. n

C. ?n

D. n0.4

85. Pick out the wrong statement?
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A. Working capital turnover ratio = sales/net working capital

B. Total cost of production is more than net sales realisation (NSR) at breakeven point

C. Return on equity = profit after tax/net worth

D. Net worth means paid up share capital and reserve & surplus (i.e. shareholders equity)

86. 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__________________?
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A. 1.5%

B. 15%

C. 10%

D. 150%

87. In a manufacturing industry, breakeven point occurs, when the___________________?
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A. Annual profit equals the expected value

B. Total annual rate of production equals the assigned value

C. Total annual product cost equals the total annual sales

D. Annual sales equals the fixed cost

88. A shareholder has ______________ say in the affairs of company management compared to a debenture holder ?
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A. More

B. No

C. Same

D. Less

89. Which of the following is the costliest material of construction used in pressure vessel construction ?
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A. Lead

B. Titanium

C. Low alloy steel

D. High alloy steel

90. 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_________________?
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A. 0.6

B. 0.2

C. 0.8

D. 0.1

91. Factory manufacturing cost is the sum of the direct production cost_________________?
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A. And plant overhead cost

B. Fixed charges and plant overhead cost

C. None of these

D. Plant overhead cost and administrative expenses

92. Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method ?
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A. Sum of the years digit method

B. Multiple straight line method

C. Declining balance method

D. Sinking fund method