Plant-Economics Quiz 2

1 / 40

Personnel working in the market research group is responsible for the job of___________?

Cost estimation

Equipment design

Equipment selection

Product evaluation

2 / 40

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

Direct production cost

General expenses

Fixed charges

Plant overhead cost

3 / 40

The ?total capital investment? for a chemical process plant comprises of the fixed capital investment and the__________?

Working capital

Overhead cost

Indirect production cost

Direct production cost

4 / 40

Pick out the wrong statement ?

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

In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)

The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment

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

5 / 40

Pick out the wrong statement?

Net sales realisation (NSR) = Gross sales ? selling expenses

Net profit = Gross margin ? depreciation ? interest

Gross margin = net income ? net expenditure

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

6 / 40

Scheduling provides information about the__________?

Proper utilisation of machines

Time of starting of job and also about how much work should be completed during a particular period

Means to minimise idle time for machines

Time of completion of job

7 / 40

Optimum number of effects in a multiple effect evaporator is decided by the______?

Floor area availability

Cost benefit analysis

Terminal parameters

Evaporation capacity required

8 / 40

Which of the following is not a component of working capital ?

Transportation facilities

Semi-finished products in the process

Finished products in stock

Raw materials is stock

9 / 40

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

10 / 40

The _______ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities ?

Current ratio

Liquids assets

Cash ratio

Net working capital

11 / 40

Which of the following is the costliest material of construction used in pressure vessel construction ?

High alloy steel

Low alloy steel

Titanium

Lead

12 / 40

Optimum economic pipe diameter for fluid is determined by the_____?

None of these

Viscosity of the fluid

Density of the fluid

Total cost considerations (pumping cost plus fixed cost of the pipe)

13 / 40

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 ?

Increases linearly

Increases

Remain constant

Decreases

14 / 40

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___________?

10%

15%

1.50%

150%

15 / 40

The depreciation during the year ?n?, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage ?N? to the ?

Difference between initial cost and salvage value

Initial cost

Book value at the end of (n ? 1)th year

Depreciation during the (n ? 1)th year

16 / 40

Pick out the wrong statement?

Return on equity = profit after tax/net worth

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

Working capital turnover ratio = sales/net working capital

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

17 / 40

The payback method for the measurement of return on investment_____?

Underemphasises liquidity

Gives a correct picture of profitability

Takes into account the cash inflows after the recovery of investments

Does not measure the discounted rate of return

18 / 40

The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of ______ percent ?

10 to 20

0.1 to 1

50 to 60

1 to 2

19 / 40

The amount of compounded interest during ?n? interest periods is__________?

p[(1+i)n ? 1)]

p(1 + i)n

p(1 ? i)n

p(1 + in)

20 / 40

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

Utilities plants

Emergency facilities

Raw materials inventory

Process equipment

21 / 40

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

Minimum cash reserve

Product inventory

Storage facilities

In-process inventory

22 / 40

Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant ?

Rate of return on investment

Discounted cash flow based on full life performance

Cash reserve

Payout period

23 / 40

The inventory of raw materials included in the working capital is usually about _______ month?s supply of raw materials valued at delivery prices?

Three

Twelve

Six

One

24 / 40

Which of the following does not come under the sales expenses for a product of a chemical plant ?

Warehousing

Customer service

Legal fees

Advertising

25 / 40

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

Multiple straight line method

Sum of the years digit method

Sinking fund method

Declining balance method

26 / 40

Which of the following is not a current asset of a chemical company ?

Chemical equipments

Inventories

Marketable securities

None of these

27 / 40

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

Loss due to decrease in the demand of product

Loss due to accident/breakdown in the machinery

Loss due to obsolescence of the equipment

Repairs and maintenance cost

28 / 40

Operating profit of a chemical plant is equal to_____?

Profit after tax

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

Net profit + tax

Profit after tax plus depreciation

29 / 40

Pick out the wrong statement ?

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

Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval

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

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

30 / 40

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(1 + i.n)

p(1 + i)n

p.i.n.

p(1 ? i.n)

31 / 40

Pick out the wrong statement ?

Turn over = opening stock + production closing stock

Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner?s contribution i.e., debt-equity ratio = total debt/net worth

Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt)

Working capital = current assets + current liability

32 / 40

Purchased cost of equipments for a chemical process plant ranges from ______ percent of the fixed capital investment?

65 to 75

20 to 40

45 to 60

10 to 20

33 / 40

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

Slightly less

Only slightly more

Almost equal

Much more

34 / 40

Total product cost of a chemical plant does not include the _______ cost?

Depreciation, property tax and insurance

Market survey

Overhead and utilities

Operating labour, supervision and supplies

35 / 40

The ratio of gross annual sales to the fixed capital investment is termed as the _________ ratio?

Capital

Cash reserve

Investment

Turnover

36 / 40

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

Pall rings

Berl saddles

Raschig rings

Intalox saddles

37 / 40

Which of the following elements is not included in the scope of market analysis ?

Economics

Competition from other manufactures

Opportunities

Product distribution

38 / 40

Out of the following, the depreciation calculated by the ______ method is the maximum?

Sinking fund

Straight line

Sum of the years digit

Diminishing balance

39 / 40

Pick out the correct statement ?

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

Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date

Difference between income and expense is termed as gross revenue

40 / 40

Payback period______?

Is affected by the variation in earnings after the recovery of the investment

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

And economic life of a project are the same

All A, B. and C

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