Plant-Economics MCQs

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

Option B: Return on equity = profit after tax/net worth

Option C: Working capital turnover ratio = sales/net working capital

Option D: Total cost of production is more than net sales realisation (NSR) at breakeven point

Correct Answer: Total cost of production is more than net sales realisation (NSR) at breakeven point ✔

Option A: Gross margin = net income – net expenditure

Option B: Net sales realisation (NSR) = Gross sales – selling expenses

Option C: At breakeven point, NSR is more than the total production cost

Option D: Net profit = Gross margin – depreciation – interest

Correct Answer: At breakeven point, NSR is more than the total production cost ✔

Option A: Difference between income and expense is termed as gross revenue

Option B: Unamortised cost is the difference between the original cost of a property and all the

Option C: Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the

Option D: Scrap value is the net amount of money obtainable from the sale of used property over and

Correct Answer: B. Unamortised cost is the difference between the original cost of a property and all the
depreciation charges made to date ✔

Option A: The annual depreciation rate for machinery and equipments in a chemical process plant is

Option B: Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost

Option C: Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital

Option D: In a chemical industry, research and development cost amounts to about 15% of net sales

Correct Answer: D. In a chemical industry, research and development cost amounts to about 15% of net sales
realisation (NSR) ✔

Option A: The financial condition at any given time

Option B: Only current assets

Option C: Only fixed assets

Option D: Only current and fixed assets

Correct Answer: The financial condition at any given time ✔

Option A: Gross revenue is that total amount of capital received as a result of the sale of goods or service

Option B: Net revenue is the total profit remaining after deducting all costs excluding taxes

Option C: The ratio of immediately available cash to the total current liabilities is known as the cash

Option D: Consolidated income statement based on a given time period indicates surplus capital and

Correct Answer: Net revenue is the total profit remaining after deducting all costs excluding taxes ✔

Option A: R [{(1 + i)n – 1}/ i ]

Option B: R [{(1 + i)n – 1}/ i (1 + i)n]

Option C: R(1 + i)n

Option D: R/(1 + i)n

Correct Answer: B. R [{(1 + i)n – 1}/ i (1 + i)n] ✔

Option A: Advertising

Option B: Warehousing

Option C: Legal fees

Option D: Customer service

Correct Answer: Legal fees ✔

Option A: Property

Option B: Excise

Option C: Income

Option D: Capital gain

Correct Answer: Income ✔

Option A: Profit before interest and tax i.e., net profit + interest + tax

Option B: Profit after tax plus depreciation

Option C: Net profit + tax

Option D: Profit after tax

Correct Answer: Profit before interest and tax i.e., net profit + interest + tax ✔

Option A: More

Option B: Less

Option C: Same

Option D: No

Correct Answer: More ✔

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

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

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

Option D: All A, B. and C.

Correct Answer: D. All A, B. and C. ✔

Option A: Electrical installation cost

Option B: Equipment installation cost

Option C: Cost for piping

Option D: Equipment insulation cost

Correct Answer: Equipment insulation cost ✔

Option A: Berl saddles

Option B: Raschig rings

Option C: Pall rings

Option D: Intalox saddles

Correct Answer: Berl saddles ✔

Option A: 10 to 20

Option B: 20 to 40

Option C: 45 to 60

Option D: 65 to 75

Correct Answer: 20 to 40 ✔

Option A: 4

Option B: 13

Option C: 22

Option D: 34

Correct Answer: 13 ✔

Option A: 40,096

Option B: 43,196

Option C: 53,196

Option D: 60,196

Correct Answer: 60,196 ✔

Option A: n

Option B: n0.6

Option C: n0.4

Option D: √n

Correct Answer: n ✔

Option A: Interest on borrowed money

Option B: Rent of land and buildings

Option C: Property tax, insurance and depreciation

Option D: Repair and maintenance charges

Correct Answer: Repair and maintenance charges ✔

Option A: Fixed cost and total cost

Option B: Total cost and sales revenue

Option C: Fixed cost and sales revenue

Option D: None of these

Correct Answer: Total cost and sales revenue ✔

Option A: 300

Option B: 600

Option C: 800

Option D: 1000

Correct Answer: 800 ✔

Option A: Diminishing balance

Option B: Straight line

Option C: Sum of the years digit

Option D: Sinking fund

Correct Answer: Diminishing balance ✔

Option A: 15000

Option B: 16105

Option C: 18105

Option D: 12500

Correct Answer: 16105 ✔

Option A: Only slightly more

Option B: Much more

Option C: Slightly less

Option D: Almost equal

Correct Answer: Much more ✔

Option A: (P – S)/n

Option B: 1 – (P/S)1/m

Option C: (m/n) (P – S)

Option D: [2 (n – m + 1)/n(n + 1)]. (P – S)

Correct Answer: D. [2 (n – m + 1)/n(n + 1)]. (P – S) ✔

Option A: 1.2 to 1.4

Option B: 2.5 to 2.7

Option C: 4.2 to 4.4

Option D: 6.2 to 6.4

Correct Answer: 4.2 to 4.4 ✔

Option A: p.i.n.

Option B: p(1 + i.n)

Option C: p(1 + i)n

Option D: p(1 – i.n)

Correct Answer: p.i.n. ✔

Option A: Decreases

Option B: Increases

Option C: Increases linearly

Option D: Remain constant

Correct Answer: Decreases ✔

Option A: Manufacturing cost

Option B: Depreciation by sinking fund method

Option C: Discrete compound interest

Option D: Cash ratio

Correct Answer: Depreciation by sinking fund method ✔

Option A: Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of

Option B: Return on investment (ROI) is the ratio of profit before interest & tax and capital employed

Option C: Working capital = current assets + current liability

Option D: Turn over = opening stock + production closing stock

Correct Answer: Working capital = current assets + current liability ✔

Option A: Plant overhead cost

Option B: Fixed charges

Option C: Direct production cost

Option D: General expenses

Correct Answer: Direct production cost ✔

Option A: Initial cost

Option B: Book value at the end of (n – 1)th year

Option C: Depreciation during the (n – 1)th year

Option D: Difference between initial cost and salvage value

Correct Answer: B. Book value at the end of (n – 1)th year ✔

Option A: 10

Option B: 20

Option C: > 20

Option D: < 20

Correct Answer: 20 ✔

Option A: 10 to 20

Option B: 35 to 45

Option C: 55 to 65

Option D: 70 to 80

Correct Answer: 35 to 45 ✔

Option A: Competition from other manufactures

Option B: Product distribution

Option C: Opportunities

Option D: Economics

Correct Answer: Economics ✔

Option A: 30

Option B: 50

Option C: 75

Option D: 95

Correct Answer: 50 ✔

Option A: Net present worth

Option B: Pay out period

Option C: Discounted cash flow

Option D: Rate of return on investment

Correct Answer: Pay out period ✔

Option A: Low alloy steel

Option B: Lead

Option C: Titanium

Option D: High alloy steel

Correct Answer: Titanium ✔

Option A: Overhead cost

Option B: Working capital

Option C: Indirect production cost

Option D: Direct production cost

Correct Answer: Working capital ✔

Option A: 1000 (1 + 0.1/4)20

Option B: 1000 (1 + 0.1)20

Option C: 1000 (1 + 0.1/4)5

Option D: 1000 (1 + 0.1/2)5

Correct Answer: 1000 (1 + 0.1/4)20 ✔

Option A: Quarterly

Option B: Semi-annually

Option C: Annually

Option D: In no case, they are equal

Correct Answer: Annually ✔

Option A: Straight line method

Option B: Declining balance

Option C: Both A. and B.

Option D: Neither A. nor B.

Correct Answer: D. Neither A. nor B. ✔

Option A: Gives a correct picture of profitability

Option B: Underemphasises liquidity

Option C: Does not measure the discounted rate of return

Option D: Takes into account the cash inflows after the recovery of investments

Correct Answer: Does not measure the discounted rate of return ✔

Option A: Fixed charges

Option B: Plant overheads

Option C: Direct products cost

Option D: Administrative expenses

Correct Answer: Administrative expenses ✔

Option A: Ageing

Option B: Wear and tear

Option C: Obsolescence

Option D: Breakdown or accident

Correct Answer: Obsolescence ✔

Option A: Decrease

Option B: Increase

Option C: No change

Option D: None of these

Correct Answer: Decrease ✔

Option A: Fixed

Option B: Overhead

Option C: Utilities

Option D: Capital

Correct Answer: Utilities ✔

Option A: Total product cost

Option B: Fixed cost

Option C: Income tax

Option D: None of these

Correct Answer: Total product cost ✔

Option A: Total annual rate of production equals the assigned value

Option B: Total annual product cost equals the total annual sales

Option C: Annual profit equals the expected value

Option D: Annual sales equals the fixed cost

Correct Answer: Total annual product cost equals the total annual sales ✔

Option A: 5 to 10

Option B: 20 to 30

Option C: 40 to 50

Option D: 60 to 70

Correct Answer: 20 to 30 ✔

Option A: Proper utilisation of machines

Option B: Means to minimise idle time for machines

Option C: Time of completion of job

Option D: Time of starting of job and also about how much work should be completed during a

Correct Answer: D. Time of starting of job and also about how much work should be completed during a
particular period ✔

Option A: Equipment installation cost

Option B: Equipment cost by scaling

Option C: Cost of piping

Option D: Utilities cost

Correct Answer: Equipment cost by scaling ✔

Option A: p[(1+i)n – 1)]

Option B: p(1 + i)n

Option C: p(1 – i)n

Option D: p(1 + in)

Correct Answer: A. p[(1+i)n – 1)] ✔

Option A: Assets = equities

Option B: Assets = liabilities + net worth

Option C: Total income = costs + profits

Option D: Assets = capital

Correct Answer: Assets = capital ✔

Option A: Fabricated equipment and machinery

Option B: Process instruments and control

Option C: Pumps and compressor

Option D: Electrical equipments and material

Correct Answer: Fabricated equipment and machinery ✔

Option A: Present worth method

Option B: Sinking fund method

Option C: Sum of the years-digits method

Option D: All A, B. and C.

Correct Answer: Sum of the years-digits method ✔

Option A: 10-15% of purchased equipment cost

Option B: 3-10% of fixed capital investment

Option C: Either A. or B.

Option D: Neither A. nor B.

Correct Answer: C. Either A. or B. ✔

Option A: Raw materials is stock

Option B: Finished products in stock

Option C: Transportation facilities

Option D: Semi-finished products in the process

Correct Answer: Transportation facilities ✔

Option A: Equipment selection

Option B: Product evaluation

Option C: Equipment design

Option D: Cost estimation

Correct Answer: Product evaluation ✔

Option A: Market survey

Option B: Operating labour, supervision and supplies

Option C: Overhead and utilities

Option D: Depreciation, property tax and insurance

Correct Answer: Market survey ✔

Option A: (1 + i)n/S

Option B: S/(1 + i)n

Option C: S/(1 + in)

Option D: S/(1 + n)i

Correct Answer: S/(1 + i)n ✔

Option A: Raw materials inventory

Option B: Utilities plants

Option C: Process equipment

Option D: Emergency facilities

Correct Answer: Raw materials inventory ✔

Option A: 15%

Option B: 10%

Option C: 1.5%

Option D: 150%

Correct Answer: 1.5% ✔

Option A: Straight line

Option B: Sinking fund

Option C: Present worth

Option D: Declining balance

Correct Answer: Declining balance ✔

Option A: Declining balance

Option B: Straight line

Option C: Sum of the years digit

Option D: None of these

Correct Answer: Straight line ✔

Option A: 121

Option B: 110

Option C: 97

Option D: 91

Correct Answer: 121 ✔

Option A: Multiple straight line method

Option B: Sinking fund method

Option C: Declining balance method

Option D: Sum of the years digit method

Correct Answer: Sinking fund method ✔

Option A: Annually

Option B: Fortnightly

Option C: Monthly

Option D: Half-yearly

Correct Answer: Annually ✔

Option A: General expenses

Option B: Overhead cost

Option C: R & D cost

Option D: None of these

Correct Answer: General expenses ✔

Option A: Cash ratio

Option B: Net working capital

Option C: Current ratio

Option D: Liquids assets

Correct Answer: Net working capital ✔

Option A: Fixed charges and plant overhead cost

Option B: And plant overhead cost

Option C: Plant overhead cost and administrative expenses

Option D: None of these

Correct Answer: Fixed charges and plant overhead cost ✔

Option A: 15

Option B: 35

Option C: 55

Option D: 75

Correct Answer: 35 ✔

Option A: Cash reserve

Option B: Capital

Option C: Turnover

Option D: Investment

Correct Answer: Turnover ✔

Option A: Total income

Option B: Gross earning

Option C: Total product cost

Option D: Fixed cost

Correct Answer: Gross earning ✔

Option A: 1 to 5

Option B: 10 to 20

Option C: 25 to 35

Option D: 35 to 45

Correct Answer: 10 to 20 ✔

Option A: Decreases

Option B: Increases

Option C: Remains the same

Option D: May increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian

Correct Answer: Decreases ✔

Option A: 2

Option B: 10

Option C: 30

Option D: 50

Correct Answer: 10 ✔

Option A: Viscosity of the fluid

Option B: Density of the fluid

Option C: Total cost considerations (pumping cost plus fixed cost of the pipe)

Option D: None of these

Correct Answer: Total cost considerations (pumping cost plus fixed cost of the pipe) ✔

Option A: 0.1

Option B: 0.6

Option C: 0.2

Option D: 0.8

Correct Answer: 0.6 ✔

Option A: Product inventory

Option B: In-process inventory

Option C: Minimum cash reserve

Option D: Storage facilities

Correct Answer: Storage facilities ✔

Option A: Cost benefit analysis

Option B: Floor area availability

Option C: Terminal parameters

Option D: Evaporation capacity required

Correct Answer: Cost benefit analysis ✔

Option A: 5 years

Option B: 7 years

Option C: 12 years

Option D: 10 years

Correct Answer: 7 years ✔

Option A: Cash reserve

Option B: Rate of return on investment

Option C: Payout period

Option D: Discounted cash flow based on full life performance

Correct Answer: Cash reserve ✔

Option A: Thermal

Option B: Nuclear

Option C: Hydroelectric

Option D: Fast breeder reactor

Correct Answer: Hydroelectric ✔

Option A: Contingencies

Option B: Onsite and offsite costs

Option C: Labour costs

Option D: Raw material costs

Correct Answer: Onsite and offsite costs ✔

Option A: Repairs and maintenance cost

Option B: Loss due to obsolescence of the equipment

Option C: Loss due to decrease in the demand of product

Option D: Loss due to accident/breakdown in the machinery

Correct Answer: Repairs and maintenance cost ✔

Option A: And economic life of a project are the same

Option B: Is the length of time over which the earnings on a project equals the investment

Option C: Is affected by the variation in earnings after the recovery of the investment

Option D: All A, B. and C

Correct Answer: Is the length of time over which the earnings on a project equals the investment ✔

Option A: One

Option B: Three

Option C: Six

Option D: Twelve

Correct Answer: One ✔

Option A: Value of the asset decreases linearly with time

Option B: Annual cost of depreciation is same every year

Option C: Annual depreciation is the fixed percentage of the property value at the beginning of the

Option D: None of these

Correct Answer: C. Annual depreciation is the fixed percentage of the property value at the beginning of the
particular year ✔

Option A: 0.1 to 1

Option B: 1 to 2

Option C: 10 to 20

Option D: 50 to 60

Correct Answer: 10 to 20 ✔

Option A: Perpetuity

Option B: Capital charge factor

Option C: Annuity

Option D: Future worth

Correct Answer: Annuity ✔

Option A: Inventories

Option B: Marketable securities

Option C: Chemical equipments

Option D: None of these

Correct Answer: Chemical equipments ✔