4

# Pick out the wrong statement.

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

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

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

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

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

4

One

Three

Six

Twelve

4

121

110

97

91

4

# Pick out the wrong statement.

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

Return on equity = profit after tax/net worth

Working capital turnover ratio = sales/net working capital

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

4

# For a typical project, the cumulative cash flow is zero at the

End of the project life

Breakeven point

Start up

End of the design stage

4

# Pick out the wrong statement.

Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes

A cost index is merely a number for a given year showing the cost at that time relative to a certain base year

Turnover ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment

Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary

4

# Payback period

And economic life of a project are the same

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

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

All (A), (B) and (C)

4

15%

10%

1.5%

150%

4

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

Cash ratio

Net working capital

Current ratio

Liquids assets

4

# Scheduling provides information about the

Proper utilisation of machines

Means to minimise idle time for machines

Time of completion of job

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

4

p.i.n.

p(1 + i.n)

p(1 + i)n

p(1 - i.n)

4

15000

16105

18105

12500

4

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

Raw materials is stock

Finished products in stock

Transportation facilities

Semi-finished products in the process

4

# Expenditure on research and development (R & D) is categorised as the __________, while making an estimate of the total product cost for a chemical plant.

Fixed expenses

General expenses

Direct production cost

4

# Factory manufacturing cost is the sum of the direct production cost

Fixed charges and plant overhead cost

None of these

4

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

p(1 + i)n

p(1 - i)n

p(1 + in)

4

Linearly

Non-linearly

Exponentially

Logarithmically

4

# Operating profit of a chemical plant is equal to

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

Profit after tax plus depreciation

Net profit + tax

Profit after tax

4

# Annual depreciation costs are constant, when the __________ method of depreciation calculation is used.

Declining balance

Straight line

Sum of the years digit

None of these

4

# The 'total capital investment' for a chemical process plant comprises of the fixed capital investment and the

Working capital

Indirect production cost

Direct production cost

4

# __________ of depreciation calculation accounts for the interest on investment.

Straight line method

Declining balance

Both (A) and (B)

Neither (A) nor (B)

4

# Out of the following, the depreciation calculated by the __________ method is the maximum.

Diminishing balance

Straight line

Sum of the years digit

Sinking fund

4

# Which of the following relationship is not correct is case of a chemical process plant?

Manufacturing cost = direct product cost + fixed charges + plant overhead costs

General expenses = administrative expenses + distribution & marketing expenses

Total product cost = manufacturing cost + general expenses

Total product cost = direct production cost + plant overhead cost

4

# Pick out the wrong statement.

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

Turn over = opening stock + production closing stock

4

# Gantt chart (or Bar chart) is helpful in

Efficient utilisation of manpower and machines

Preparing production schedule

Efficient despatching of products

Inventory control

4

# Chemical engineering plant cost index is used for finding the present cost of a particular chemical plant, if the cost of similar plant at some time in the past is known. The present cost of the plant = original cost × (index value at present/ index value at time original cost was obtained). The most major component of this cost index is

Fabricated equipment and machinery

Process instruments and control

Pumps and compressor

Electrical equipments and material

4

Cash reserve

Capital

Turnover

Investment

4

300

600

800

1000

4

Decrease

Increase

No change

None of these

4

# For a given fluid, as the pipe diameter increases, the pumping cost

Decreases

Increases

Remains the same

May increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian