# ENGINEERING ECONOMICS AND COST ANALYSIS(EECA) MA2451 ANNA UNIVERSITY QUESTION BANK

**MA2451 ENGINEERING ECONOMICS AND COST ANALYSIS**

**UNITI**

**- INTRODUCTION TO ECONOMICS**

**PART – A (2MARKS)**

**1. Define Economics?**

**2. Write any four goals of economy?**

**3. Explain law of supply and demand?**

**4. Write about factors in fluency demand?**

**5. Write about factors in fluency supply?**

**6. Define Economic efficiency?**

**7. Define engineering economics?**

**8. Define marginal cost?**

**9. Define marginal revenue?**

**10. Define sunk cost?**

**11. Define break even analysis?**

**12. Define P/V ratio?**

**13. Define processes planning?**

**PART –B**

**1. Explain in detail about flow in an economy? (16)**

**2. Explain the concept of law of supply and demand with suitable example? (16)**

**3. Briefly explain about element of cost and its classification? (16)**

**4. Explain the concept of break even analysis with clear diagram? (16)**

**5. Briefly explain about process planning and its various types? (16)**

**6. (a) (i)Bring out the scope of engineering economics with appropriate examples (8)**

**(ii) A concern manufacturing a domestic appliance proposes to put up an improved model in market and the**

**selling price for the same to be decided .The selling price will cover the overheads and ensure the proportion of**

**profit on sales as before.The material in the new model will cost Rs 4000 and the direct wages would be Rs**

**2000.Following figures relate to the previous year:**

**Stock material on 1st April 2006 Rs 2,00,000 (8)**

**Stock material on 31 stMarch 2007 Rs 2,20,000**

**Purchase of raw material in this period Rs 5,20,000**

**Manufacturing wages Rs 1,60,000**

**Works overhead Rs 80,000**

**Administrative and sales overhead Rs 80,000**

**Sales during the year Rs 9,02,000**

**Suggest a selling price .Overhead absorption base on % of direct labour.**

**7. (i) Explain the process of material selection in new product development (8)**

**(ii) From the following details ,calculate the break even point .What will be the selling price per unit if break**

**even point to be brought to 900 units:**

**Variable cost per units Rs 750 (8)**

**Fixed expenses Rs 27,00,000**

**Selling price per unit Rs 1,000**

**UNITII - VALUE ENGINEERING**

**PART – A (2 MARKS)**

**1.What are the approaches available for make or buy decision?**

**2. Define value engineering?**

**3. Write any four aims of value engineering?**

**4. Write the basic steps of value engineering?**

**5. Define time value of money?**

**6. Define single –payment compound amount method?**

**7. Define single payment present worth factor?**

**8. Define equal payment series sinking fund factor method?**

**9. Define equal payment series present worth factor method?**

**10. Define equal payment series capital recovery factor method?**

**PART –B**

**1. Explain in details about criteria for make or buy decision and its approaches? (Also see**

**problems) (16)**

**2. Problems in single –payment compound amount method?**

**(16)**

**3. Problems in single payment present worth factor?**

**(16)**

**4. Problems in equal payment series sinking fund factor method?**

**(16)**

**5. Problems in equal payment series present worth factor method?**

**(16)**

**6. Problems in equal payment series capital recovery factor method?**

**(16)**

**7. ( i) What is uniform gradient conversion?Illustrate with an example. (8)**

**(ii)What is value engineering ?With suitable example ,explain the various phases of value (8)**

**engineering job plan**

**(a) An engineer is considering two types of pressure sensors for a low pressure steam line.The costs are shown**

**below.Which should be selected based on a present worth comparison at an interest rate of 16 % per year?**

**Type X Type Y**

**First cost Rs 76,000 Rs 1,29,000**

**Maintenance cost/year 12,000 9000**

**Salvage value 0 20,000**

**life,years 2 4**

**UNIT III - CASH FLOW**

**PART – A**

**1. Write down the techniques for comparing the worthiness of the project?**

**2. Define present worth method( Revenue dominated cash flow diagram)**

**3. Define future worth method( Revenue dominated cash flow diagram)**

**4. Define future worth method(cash dominated cash flow diagram)**

**5. Define Annual equivalent method(Revenue dominated cash flow diagram)**

**6. Define Annual equivalent method(cost dominated cash flow diagram)**

**7. Define rate of return method?**

**8. What is annual equivalent method of comparing alternatives?**

**9. What is revenue dominated cash flow?**

**10 What is the economic life of a project?**

**11 What are the various methods available in decision making in selection of**

**Alternative in economic analysis of investment?**

**PART – B**

**1. Problems in present worth method (Revenue dominated cash flow diagram) (16)**

**2. Problems in future worth method (Revenue dominated cash flow diagram) (16)**

**3. Problems in Annual equivalent method (Revenue dominated cash flow diagram) (16)**

**4. Problems in Annual equivalent method (cost dominated cash flow diagram) (16)**

**5. Problems in rate of return method (16)**

**6.. A company that manufactures amplified transducers is trying to divide between the machines shown**

**below.Compare them on the basis of annual worth using an interest rate of 15**

**5 pr year**

**Variable speed Dual speed**

**First cost,Rs 4,50,000 2,40,000**

**Annual operating cost Rs 3,10,000 3,50,000**

**Overhaul in years 2 and 4 ,Rs - 60,000**

**Overhaul in years 5 ,Rs 1,20,000 -**

**Salvage value ,Rs 1,00,000 80,000**

**Life ,years 8 6**

**UNIT IV - REPLACEMENT AMD MAINTAINENCE ANALYSES**

**PART – A**

**1. Write the different types of maintenance?**

**2. Define prevention maintenance (PM)?**

**3. Define Break down maintenance ?**

**4. Write the different types of Replacement?**

**5. Define economic life of an asset?**

**6. What are the types of Replacement policies?**

**7. What are the types of replacement problem?**

**PART – B**

**1. Problems in Maintenance (16)**

**2. Problems in types of Replacement? (16)**

**3. Problems in finding the economic life of an asset? (16)**

**4. Problems in Capital recovery with return (16)**

**5. Problems in Simple probabilistic model for assets which fail completely (16)**

**6.(i) What is defender challenger concept in replacement ?Illustrate with an example. (8)**

**(ii)Explain the causes for replacement of assets ,in detail with examples (8)**

**7. Initial cost of a machine is Rs 6,00,000, with other details as below: (8)**

**Year 1 2 3 4 5**

**Resale value (Rs) 4,20,000 3,00,000 2,04,000 1,44,000 96,500**

**Cost of spares (Rs) 40,000 42,700 48,800 57,000 68,000**

**Cost of labour (Rs) 1,40,000 1,60,000 1,80,000 2,10,00 0 2,50,000**

**Determine the optimum period for replacement of the machine.**

**UNIT-5**

**DEPRECIATION**

**PART – A**

**1. Define Depreciation?**

**2. What are the types of Depreciation?**

**3. Define Straight line method of depreciation?**

**4. Define Declining balance method of depreciation?**

**5. Define Sum of the year-digits method of depreciation?**

**6. Define sinking fund method of depreciation?**

**7. Define Service output method of depreciation?**

**8. Define inflation?**

**9. List the reasons for inflation?**

**10. List the effect of inflation ?**

**PART – B**

**1. Problems in different types of depreciation methods (16)**

**2. Problems in inflation adjusted decision (16)**

**3. Problems in finding the economic life of an asset (16)**

**4. (a) (i) How to adjust inflation in evaluating public alternatives? Explain the procedure. (8)**

**(ii)Find the depreciation annuity by annuity method after three years,when the initial cost of the machine is Rs**

**8,00,000 an salvage value at the end of three years is Rs 4,00,000.Rate of interest 10 % (8)**

**5. (i) What is economic life of an asset?How to determine it ?Explain**

**(ii) The cost of a machine is Rs 1,60,000 and its scrap value is Rs 40,000 .Estimate life 5 years .Using sum of**

**years digits method ,determine depreciation charges for each year.**