Costs (on annual basis) are constant when the straight line method is used for its determination

Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time

Does figure in the calculation of income tax liability on cash flows from an investment

Practice Chemical Engineering Plant Economics Multiple Choice Questions Quiz-1

Q.1

Relative cost of chemical process plants in India is about __________ percent more than the similar plants in U.S.A.

Q.2

The amount of simple interest during 'n' interest period is (where, i = interest rate based on the length of one interest period, p = principal)

P.i.n.
P(1 + i.n)
P(1 + i)n
P(1 - i.n)

Q.3

Manufacturing cost in a chemical company does not include the

Fixed charges
Plant overheads
Direct products cost
Administrative expenses

Q.4

Which of the following is not a component of depreciation cost?

Repairs and maintenance cost
Loss due to obsolescence of the equipment
Loss due to decrease in the demand of product
Loss due to accident/breakdown in the machinery

Q.5

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.

15000
16105
18105
12500

Q.6

Utilities cost in the operation of chemical process plant comes under the

General expenses
Plant overhead cost
Fixed charges
Direct production cost

Q.7

'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

(P - S)/n
1 - (P/S)^1/m
M/n x (P - S)
2(n - m + 1)/n(n + 1) x (P - S)

Q.8

Cost incurred towards __________ in a chemical plant is a component of the utilities cost.

Water supply
Running a control laboratory
Property protection
Medical services

Q.9

A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.

Current asset
Current liability
Long term debt
Profit

Q.10

Profit is equal to revenue minus

Book value
Total cost
Operating cost
None of these

Q.11

Effective and nominal interest rates are equal, when the interest is compounded

Annually
Fortnightly
Monthly
half-yearly

Q.12

Which of the following ceramic packing materials is the costliest of all?

Berl saddles
Raschig rings
Pall rings
Intalox saddles

Q.13

Which of the following is not a component of the fixed capital for a chemical plant facility?

Raw materials inventory
Utilities plants
Process equipment
Emergency facilities

Q.14

Which of the following is not a component of the working capital for a chemical process plant?

Product inventory
In-process inventory
Minimum cash reserve
Storage facilities

Q.15

For a given fluid, as the pipe diameter increases, the pumping cost

Decreases
Increases
Remains the same
May increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian

Q.16

The ratio of gross annual sales to the fixed capital investment is termed as the __________ ratio.

Cash reserve
Capital
Turnover
Investment

Q.17

Pick out the wrong statement.

Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes
A cost index is merely a number for a given year showing the cost at that time relative to a certain base year
Turn over ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment
Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary

Q.18

Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method?

Multiple straight line method
Sinking fund method
Declining balance method
Sum of the years digit method

Q.19

Maximum production start up cost for making a chemical plant operational is about __________ percent of the fixed capital cost.

Q.20

The economic life of a large chemical process plant as compared to a small chemical plant is

Only slightly more
Much more
Slightly less
Almost equal

Q.21

Depreciation

Costs (on annual basis) are constant when the straight line method is used for its determination
Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time
Does figure in the calculation of income tax liability on cash flows from an investment
All of the above

Q.22

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.

300
600
800
1000

Q.23

Fixed charges for a chemical plant does not include the

Interest on borrowed money
Rent of land and buildings
Property tax, insurance and depreciation
Repair and maintenance charges

Q.24

If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be __________ percent.

10
20
>20
< 20

Q.25

Which of the following is the cheaptest material of construction for the storage of sodium hydroxide upto a concentration of 75%?

Stainless steel
Plain carbon steel
Nickel
Copper

Q.26

Pick out the correct statement.

Difference between income and expense is termed as gross revenue
Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date
Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment
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

Q.27

'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

1.2 to 1.4
2.5 to 2.7
4.2 to 4.4
6.2 to 6.4

Q.28

Optimum economic pipe diameter for fluid is determined by the

Viscosity of the fluid
Density of the fluid
Total cost considerations (pumping cost plus fixed cost of the pipe)
None of these

Q.29

In which of the electric power generation system, the operating cost is minimum?

Thermal
Nuclear
Hydroelectric
Fast breeder reactor

Q.30

Operating profit of a chemical plant is equal to

Profit before interest and tax i.e., net profit + interest + tax
Profit after tax plus depreciation
Net profit + tax
Profit after tax