Free Plant Design and Economics MCQs with Answers

• A. Income tax
• B. Fixed cost
• C. Total product cost
• D. None of these

Explanation: Gross earning is obtained before deducting financial items such as income tax, by subtracting the total product cost from total income.

• A. Total annual rate of production equals the assigned value
• B. Annual sales equals the fixed cost
• C. Annual profit equals the expected value
• D. Total annual product cost equals the total annual sales

Explanation: At the break-even point, revenue exactly covers total costs, so there is neither profit nor loss.

• A. Time of starting of job and also about how much work should be completed during a
• B. Means to minimise idle time for machines
• C. Time of completion of job
• D. Proper utilisation of machines
• E. particular period

Explanation: Scheduling specifies when jobs should start and what amount of work should be completed during each period.

• A. Equipment installation cost
• B. Equipment cost by scaling
• C. Cost of piping
• D. Utilities cost

Explanation: The six-tenths rule estimates the cost of equipment at a new capacity from the known cost at another capacity: cost varies approximately…

• A. p(1 - i)n
• B. p(1 + i)n
• C. p[(1+i)n - 1)]
• D. p(1 + in)

Explanation: After n periods, the accumulated amount is p(1+i)^n, so the interest earned alone is p[(1+i)^n - 1].

• A. Assets = equities
• B. Assets = liabilities + net worth
• C. Total income = costs + profits
• D. Assets = capital

Explanation: The accounting identity is Assets = Liabilities + Net worth, while total income equals costs plus profit.

• A. Process instruments and control
• B. Fabricated equipment and machinery
• C. Pumps and compressor
• D. Electrical equipments and material

Explanation: Fabricated equipment and machinery usually carry the largest weighting in a chemical plant cost index because major plant expenditure is…

• A. Present worth method
• B. Sinking fund method
• C. Sum of the years-digits method
• D. All A, B. and C.

Explanation: The sum-of-the-years-digits method allocates depreciation using an accelerated fraction of the depreciable cost and does not apply…

• A. 10-15% of purchased equipment cost
• B. 3-10% of fixed capital investment
• C. Neither A. nor B.
• D. Either A. or B.

Explanation: Electrical installation is commonly estimated either as about 10–15% of purchased equipment cost or as roughly 3–10% of fixed capital…

• A. Transportation facilities
• B. Finished products in stock
• C. Raw materials is stock
• D. Semi-finished products in the process

Explanation: Working capital includes inventories such as raw materials, finished goods, and work-in-process.

• A. Equipment selection
• B. Product evaluation
• C. Equipment design
• D. Cost estimation

Explanation: Market research examines customer needs, competing products, demand, and the suitability of a proposed product, so product evaluation is…

• A. Overhead and utilities
• B. Operating labour, supervision and supplies
• C. Market survey
• D. Depreciation, property tax and insurance

Explanation: Total product cost covers manufacturing expenses such as labour, utilities, supplies, overhead, depreciation, taxes, and insurance.

• A. (1 + i)n/S
• B. S/(1 + n)i
• C. S/(1 + in)
• D. S/(1 + i)n

Explanation: Compounding gives S = P(1 + i)^n, so rearranging for the present worth gives P = S/(1 + i)^n.

• A. Utilities plants
• B. Raw materials inventory
• C. Process equipment
• D. Emergency facilities

Explanation: Fixed capital consists of durable plant assets such as process equipment, utility plants, and emergency facilities.

• A. Declining balance
• B. Sum of the years digit
• C. Straight line
• D. None of these

Explanation: The straight-line method divides the depreciable amount equally over the asset life, giving the same depreciation charge every year.

• A. 121
• B. 110
• C. 97
• D. 91

Explanation: With 10% interest every half-year, one year contains two compounding periods: Rs. 100 × (1.10)² = Rs. 121.

• A. Multiple straight line method
• B. Sum of the years digit method
• C. Declining balance method
• D. Sinking fund method

Explanation: The sinking-fund method charges less depreciation in the early years, so its early book values remain higher than with straight-line…

• A. Annually
• B. Fortnightly
• C. Monthly
• D. Half-yearly

Explanation: Nominal and effective annual rates are identical only when compounding occurs once per year.

• A. Overhead cost
• B. General expenses
• C. R & D cost
• D. None of these

Explanation: Total product cost is obtained by adding general expenses to manufacturing cost.

• A. Cash ratio
• B. Current ratio
• C. Net working capital
• D. Liquids assets

Explanation: Net working capital measures the funds tied up in short-term operations and is calculated as current assets minus current liabilities.