Chemical Engineering Plant Economics MCQ - Set 01

Practice Test: Question Set - 01

1. Which of the following is the cheapest material of construction for the storage of sodium hydroxide up to a concentration of 75%?
    (A) Stainless steel
    (B) Plain carbon steel
    (C) Nickel
    (D) Copper

2. Which of the following relationship is not correct is case of a chemical process plant?
    (A) Manufacturing cost = direct product cost + fixed charges + plant overhead costs
    (B) General expenses = administrative expenses + distribution & marketing expenses
    (C) Total product cost = manufacturing cost + general expenses
    (D) Total product cost = direct production cost + plant overhead cost

3. A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.
    (A) Current asset
    (B) Current liability
    (C) Long term debt
    (D) Profit

4. Which of the following is a component of working capital investment?
    (A) Utilities plants
    (B) Maintenance and repair inventory
    (C) Process equipments
    (D) Depreciation

5. Which of the following is the costliest source of getting hydrogen on commercial scale for the manufacture of nitrogenous fertilizer?
    (A) Coal gasification
    (B) Steam reforming of naphtha
    (C) Electrolysis of water
    (D) Coke oven gas

6. Pick out the wrong statement.
    (A) Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes
    (B) A cost index is merely a number for a given year showing the cost at that time relative to a certain base year
    (C) Turnover ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment
    (D) Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary

7. If an amount R is paid at the end of every year for 'n' years, then the net present value of the annuity at an interest rate of 'i' is
    (A) R [{(1 + i)n - 1}/ i ]
    (B) R [{(1 + i)n - 1}/ i (1 + i)n]
    (C) R (1 + i)n
    (D) R/(1 + i)n

8. Pick out the wrong statement.
    (A) The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment
    (B) Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost
    (C) Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment
    (D) In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)

9. Which of the following does not come under the sales expenses for a product of a chemical plant?
    (A) Advertising
    (B) Warehousing
    (C) Legal fees
    (D) Customer service

10. Operating profit of a chemical plant is equal to
    (A) Profit before interest and tax i.e., net profit + interest + tax
    (B) Profit after tax plus depreciation
    (C) Net profit + tax
    (D) Profit after tax

11. Which of the following is not a current asset of a chemical company?
    (A) Inventories
    (B) Marketable securities
    (C) Chemical equipments
    (D) None of these

12. _________ taxes are based on gross earnings.
    (A) Property
    (B) Excise
    (C) Income
    (D) Capital gain

13. A balance sheet for an industrial concern shows
    (A) The financial condition at any given time
    (B) Only current assets
    (C) Only fixed assets
    (D) Only current and fixed assets

14. Pick out the wrong statement.
    (A) Gross revenue is that total amount of capital received as a result of the sale of goods or service
    (B) Net revenue is the total profit remaining after deducting all costs excluding taxes
    (C) The ratio of immediately available cash to the total current liabilities is known as the cash ratio
    (D) 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

15. Pick out the correct statement.
    (A) Difference between income and expense is termed as gross revenue
    (B) Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date
    (C) Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment
    (D) 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

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Item Reviewed: Chemical Engineering Plant Economics MCQ - Set 01 Rating: 5 Reviewed By: Pranab Debnath
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