Free Plant Design and Economics MCQs with Answers

• A. None of these
• B. And plant overhead cost
• C. Plant overhead cost and administrative expenses
• D. Fixed charges and plant overhead cost

Explanation: Factory manufacturing cost includes direct production cost, fixed charges, and plant overhead cost.

• A. 15
• B. 35
• C. 55
• D. 75

Explanation: The conventional chemical-plant cost estimate used in this comparison places Indian plants at about 35% above comparable U.S. plants.

• A. Cash reserve
• B. Turnover
• C. Capital
• D. Investment

Explanation: The turnover ratio is gross annual sales divided by fixed capital investment.

• A. 1 to 5
• B. 25 to 35
• C. 10 to 20
• D. 35 to 45

Explanation: Utilities commonly account for roughly 10 to 20% of total product cost in ordinary chemical process plants.

• A. 2
• B. 10
• C. 30
• D. 50

Explanation: Construction expenses are commonly estimated at about 10% of the total direct cost of a chemical plant.

• A. Total cost considerations (pumping cost plus fixed cost of the pipe)
• B. Density of the fluid
• C. Viscosity of the fluid
• D. None of these

Explanation: The economic diameter minimizes total annual cost by balancing the pipe's fixed or installation cost against pumping cost.

• A. 0.1
• B. 0.6
• C. 0.2
• D. 0.8

Explanation: The six-tenths rule is written as cost proportional to capacity raised to the 0.6 power.

• A. Product inventory
• B. In-process inventory
• C. Minimum cash reserve
• D. Storage facilities

Explanation: Working capital includes inventories and cash needed for routine operation, such as product and in-process inventories and a minimum cash…

• A. 5 years
• B. 7 years
• C. 12 years
• D. 10 years

Explanation: The operating payback period is Rs. 100 lakhs divided by Rs. 20 lakhs per year, or 5 years.

• A. Rate of return on investment
• B. Cash reserve
• C. Payout period
• D. Discounted cash flow based on full life performance

Explanation: Cash reserve is a component of working capital, not a profitability-evaluation method.

• A. Thermal
• B. Nuclear
• C. Hydroelectric
• D. Fast breeder reactor

Explanation: Hydroelectric plants have no fuel cost and generally require relatively low operating and maintenance expenditure after construction.

• A. Contingencies
• B. Raw material costs
• C. Labour costs
• D. Onsite and offsite costs

Explanation: Direct fixed capital is grouped into onsite costs for the process facilities and offsite costs for supporting facilities and utilities.

• A. Loss due to accident/breakdown in the machinery
• B. Loss due to obsolescence of the equipment
• C. Loss due to decrease in the demand of product
• D. Repairs and maintenance cost

Explanation: Depreciation represents loss in an asset's value from causes such as obsolescence, wear, and accidental damage.

• 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

Explanation: The payback period is the time required for a project's cumulative earnings or cash inflows to recover its initial investment.

• A. Six
• B. Three
• C. One
• D. Twelve

Explanation: Working capital commonly includes about one month's stock of raw materials valued at delivered cost.

• A. 0.1 to 1
• B. 1 to 2
• C. 50 to 60
• D. 10 to 20

Explanation: For most chemical plants, working capital is commonly estimated as roughly 10 to 20 percent of total capital investment.

• A. Annuity
• B. Capital charge factor
• C. Perpetuity
• D. Future worth

Explanation: Equal payments made at equal time intervals form an annuity. A perpetuity is a special annuity that continues indefinitely, while future…

• A. Inventories
• B. Chemical equipments
• C. Marketable securities
• D. None of these

Explanation: Inventories and marketable securities are current assets because they can normally be converted into cash within the operating cycle.

• A. 2V
• B. V/2
• C. V
• D. 3V

Explanation: A dike or bund is designed to retain the contents of the storage vessel if it leaks, so its required containment volume is taken as the…

• A. Is copper
• B. Melts below 300°C
• C. Is copper phosphorous alloy
• D. Melts below the melting points of base metals

Explanation: In brazing, the filler metal melts and flows at a temperature below the melting points of the steel base plates.