Question Paper Code: Q 2328

B.E.lB.Tech. DEGREE EXAMINATION, NOVEMBERJDECEMBER 2009.

Eighth Semester

(Regulation 2004)

Mechanical Engineering

MG 1452 - ENGINEERING ECONOMICS AND COST ANALYSIS

(Common to Production Engineering/Automobile Engineering)

(Common to B.E. (Part-Time) Seventh Semester-Regulation 2005)

Time: Three hours Maximum: 100 marks

Answer ALL questions.

PART A - (10 x 2 = 20 marks)

1. State the law of Demand.

2. What is Break-Even Analysis?

3. Explain the concept of Discounting.

4. What is Value Engineering?

5. What is Present worth method of comparing alternatives?

6. How is rate of return method useful in evaluating the alternatives?

7. What is Predictive Maintenance?

8. What are all the types of Replacement Problem?

9. State the objectives behind provision of depreciation.

10. What is Sinking fund method of depreciation?

 PART B - (5 x 16 = 80 marks)

11. (a) (i) Explain as to how the concept of elasticity of demand is superior to
concept of law of demand.

(ii) Analyse the various types of elasticity of demand and their

usefulness. (4 + 12)

Or

(b) What is cost volume 'profit analysis? State the assumptions and
applications of break even analysis. (4 + 4 + 8)

12. (a) What are all the function, aims of value engineering? Discuss the value
engineering procedure. (3 + 3 + 10)

Or

(b) (i) What is time value of money? How is it useful in taking investment
related decision?

(ii) Compute the present value of Rs. 1,000 receivable 6 years hence if
the rate of discount is 10 percent? (4 + 4 + 8)

13. (a) Discuss with example, present worth method and future worth method of
comparison of alternatives.

Or

(b) Compare annual equivalent method and rate of return method of

comparing alternatives with appropriate examples.

14. (a) Analyse the various types of maintenance and their relative merits and
demerits.

Or

(b) (i) Trace out the types of replacement problem.

(ii) Develop a simple probabilistic model for items which fail

completely.
2 Q 2328
15. . (a) (i) Analyse the causes and objectives behind the provision of
depreciation.
(ii) Original cost of the machine Rs. 10,000
Life time 5 years
Scrap or residual value Rs. 1,000.
Find out the rate of depreciation for the machine using straight line
method. (6 + 10)

Or

(b) (i) Write about the procedtu·e to adjust inflation.

(ii) Give out examples on comparison of alternatives and determination
of economic life of asset. . (8 + 8)

3
Q2328
 Reg. No.: [
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Question Paper Code: D 2315

B.E.IB.Tech. DEGREE EXAMINATION, APRILIMAY 2010.

Eighth Semester

Mechanical Engineering

MG 1452 - ENGINEERING ECONOMICS AND COST ANALYSIS

(Common to Production Engineering and Automobile Engineering,

Mechatronic Engineering and Metallurgical Engineering)

(Regulation 2004)

Time: Three hours Maximum: 100 marks

(Interest Tables may be provided)

Answer ALL questions.

PART A - (10 x 2 = 20 marks)

1. Write about the cash flow in a simple economy.

2. Distinguish between technical and economic efficiency.

3. What would be the future value of Rs. 100 invested in a fixed deposit for
5 years with an interest rate of 15% compounded annually?

4. What is time value of money?

5. Define IRR and MARR.

6. How does present worth method help in comparing alternatives?

7. What is preventive maintenance?

8. List down the types of replacement problem?

9. What is depreciation fund?

10. Give the expression for the calculation of depreciation under sum of years-
digits method of depreciation.
 PART B - (5 x 16 = 80 marks)

11. (a) (i) Draw a breakeven chart and explain its components. (8 + 8)
(ii) From the following figures find out

(1) the break-even sales quantity

(2) the break-even sales

(3) if the production quantity IS 30,000, find contribution and

margin of safety.

Fixed cost = Rs. 10,00,000; Variable cost per unit = Rs. 50; Selling
price per unit = Rs. 100.

Or

(b) What is process planning? What are its objectives? Explain the various
steps in process planning. (2 + 2 + 12)

12. (a) Write about the aims of value engineering and briefly explain the steps of
value engineering.

Or

(b) Mr. Ganesh is planning for his retired life. He has 10 more years of
service. He would like to deposit 20% of his salary, which is Rs. 10,000, at
the end of the first year and thereafter he wishes to deposit every
year with an annual Increase of Rs. 2,000 for the next
9 years. At an interest rate of 20%. Find the total amount at the end of
the 10th year at which time he retires.

13. (a) The cost of erecting an oil well is Rs. 1,50,00,000. The annual equivalent
yield from the oil well is Rs. 30,00,000. The salvage value after its useful
life of 10 years is Rs. 2,00,000. Assuming an interest rate of 18%,
compounded annually, find out whether the erection of the oil well is
financially feasible, based on the present worth method.

Or

(b) A person is planning a new business. The initial outlay and cash flow
pattern for the new business are as listed below. The expected life of the
business is five years. Find the rate of return for the new business.
Period 1 2 3 4 5
Cash flow Rs.
°
-1,00,000 30,000 30,000 30,000 30,000 30,000

2 D 2315
14. (a) A firm is considering replacement of an equipment, whose first cost is
Rs. 1,750 and the scrap value is negligible at any year. Based on
experience, it was found that the maintenance cost is zero during the
first year and it increases by Rs. 100 every year thereafter.
(i) When should the equipment be replaced if i = 0%
(ii) When should the equipment be replaced if i = 12 %

Or
(b) Discuss the reasons for replacement and the different types of
maintenance and distinguish between breakdown and preventive
maintenance.

15. (a) The Beta Drug Company has just purchased a capsulation machine for
Rs. 20,00,000. The plant engineer estimates that the machine has a
useful life of five years and a salvage value of Rs. 25,000 at the end of its
useful life. Compute the depreciation schedule for the machine by each of
the following depreciation methods.
(i) Straight line method of depreciation
(ii) Sum-of-the-years digits method of depreciation
(iii) Double declining balance method of depreciation.

Or
(b) A company has purchased a bus for its officers for Rs. 10,00,000 the
expected life of the bus is eight years. The salvage value of the bus at the
end of its life is Rs. 1,50,000. Find the following using the sinking fund
method of depreciation:
(i) Depreciation at the end of the third year and fifth year
(ii) Book value at the end ofthe second year and sixth year.

3 D 2315
 Reg. No. : I I I I I I I I I I I I I

[Question Paper Code: 13060

B.E.lB.Tech. DEGREE EXAMINATION, MAY/JUNE 2012.

Sixth Semester

Automobile Engineering

080120038 - ENGINEERING ECONOMICS AND FINANCE

(Common to Mechanical Engineering)

(Regulation 2008)

Time : Three hours Maximum: 100 marks

Answer ALL questions. PART

A- (10 x 2 = 20 marks)

1. Differentiate engineering efficiency and economic efficiency.

2. What is sunk cost?

3. List few factors that need to be considered in making a "make or buy" decision.

4. What is value engineering?

5. What are cash equivalents?

6. Is it possible for a cash balance to decrease when the company makes a net
profit for any given period?

7. What is preventive maintenance?

8. What are the major factors that determine the economic life of an asset?

9. List few causes of depreciation.

10. What are the assumptions for straight line method of calculating depreciation?
 PART B - (5 x 16 = 80 marks)
11. (a) Explain how supply and demand determine the equilibrium price. What
happens if the supply curve shifts to the right? Illustrate.

(b) Max & co has the following cost data for two-successive periods.

Year I (Rs.) Year II (Rs.)

Sales 50,000 1,20,000

Fixed Costs 10,000 20,000

Variable Cost 30,000 60,000

Determine the break even point.

12. (a) (i) Why money to be received in the future IS worth less than the
money to be received immediately? (6)

(ii) Describe the procedure of value engineering with an example. (10)

Or

(b) Compare and contrast the six basic types of time value of money
problems with an example situation in which they would each apply.

13. (a) Shiva has arranged to buy some testing machine for his hospital. He
estimates that it will have a 6 year useful life and no salvage value at the
end of equipment life. The dealer has offered two alternative ways to pay
for the equipment.

(i) Par Rs. 90,000 immediately and Rs. 10,000 at the end of one year.

(ii) Pay nothing until the end of fourth year when a single payment of
Rs. 1,25,000 must be made.

If he thinks that 14% is a suitable interest rate, which alternative is the

best for him?

Or

(b) XYZ finance is coming with an option of accepting Rs.I0,000 now and
paying a sum of Rs.1,60,000 after 20 years. ABC finance is coming with a
similar option of accepting Rs.10,000 now and paying a sum of
Rs.3,00,000 after 25 years. Compare and select the best alternative based
on the future worth method of comparison with 15% interest rate,
compounded annually.
2 13060
14. (a) Give a detailed account on the various types of replacement problems
with examples.

Or
(b) (i) Explain the various maintenance types with examples. (8)
(ii) What are the general guidelines in framing a replacement
policy? (8)

15. (a) Enumerate the methods of calculating depreciation? Discuss briefly the
merits and demerits of these methods.

Or
(b) On 1 st April, 2005, Raju Ltd purchased a machine for RsA,OO,OOO T.he
company incurred Rs.28,000 towards freight and insurance, and
Rs.12,000 towards installation charges. The estimated useful life of
machinery is four years. The estimated scrap value of machinery on the
expiry of its useful life is Rs. 40,000. On 1 st April, 2008, the company
spent Rs.10,000 towards the machine's repair. Calculate the depreciation
amount and the rate of depreciation. Prepare the machinery account for
the first four financial years ending March 31 st according to traight line
method under the followingconditions.
(i) If no provision for depreciation account is maintained and
(ii) If provision for depreciation account is maintained.

3 13060
 Reg. No.: I I I I I I I I I· I I I I

1 Question Paper Code: 115561

B.E.IB.Tech. DEGREE EXAMINATION, NOVEMBER/DECEMBER 2012.

Eighth Semester

Mechanical Engineering

MG 2451/MG 811GE 14511080120038- ENGINEERING ECONOMICS AND COST

ANALYSIS

(Common to Production Engineering)

(Regulation. 2008)

(Common to PTMG 2451- Engineering Economics and Cost Analysis for

B.E. (Part-Time) Mechanical Engineering - Seventh Semester - Regulation 2009)

Time : Three hours Maximum: 100 marks

Use of interest tables is permitted.

Answer ALL questions. PART

A - (10 x 2 = 20 marks)

1. . Illustrate the effect of price on demand and supply; illustrate with the help of a
diagram.

2. What are the ways by which the economic efficiency can be improved?
3. Define value analysis (VA)/value engineering (VE).
4. How long will it take any sum to triple itself at 5 percent simple-interest rate?
5. Draw a neat sketch of present worth function graph.
6. Write short notes on rate of return method.
7. Distinguish between breakdown maintenance and preventive maintenance.
8. Write short notes on reasons for replacement.
9. Define the following: Depreciation and book value.
10. Distinguish between declining balance method of depreciation and double
declining balance method of depreciation.
 PART B - (5 x 16 = 80 marks)
. 11. (a) Krishna Company Ltd. have the followingdetails:
Fixed cost = Rs. 40,00,000
Variable cost per unit = Rs.300
Selling price per unit = Rs.500
Find
(i) The break-even sales quantity
(ii) The break-even sales
(iii) If the actual production quantity is 1,20,000,find the following:
(1) Contribution
(2) Margin of safety by all methods.

Or
(b) (i) Define break-even point. Draw a break-even chart and explain its
components. . (8)
(ii) Discuss the factors which influence demand and supply. (8)

12. (a) (i) Discuss the symptoms favoring the application of VANE. (6)
(ii) A person is planning for his retired life. He has 10 more years of
service. He would like to deposit 20% of his salary, which is
. Rs. 4,000, at the erid of the first year, and thereafter he wishes to
deposit the amount with an annual increase of Rs. 500 for the next
9 years with an interest rate of 15%. Find the total amount at the
end of the 10th year of the above series. (10)

Or
(b) (i) A company has to replace a present facility after 15 years at an
outlay of Rs. 5,00,000. It plans to deposit an equal amount at the
end of every year for the next 15 years at an interest rate of 18%
compounded annually. Find the equivalent amount that must be
deposited at the end of every year for the next 15 years. (10)
(ii) Discuss the advantages and application areas of values engineering.
(6)

13. (a) A company must decide whether to buy machine A or machine B:

Machine A Machine B
Initial cost Rs. 4,00,000 Rs. 8,00,000
Useful life, in years 4 4
Salvage value at the end of machine life Rs. 2,00,000 Rs. 5,50,000
Annual maintenance cost Rs. 40,000 0
At 12% interest rate, which machine should he selected? (Use future
worth method of comparison).
Or
 2 11556

PEC/MECH Page 16
 (b) A transport company has been looking for a new tyre for its truck and
has located the following alternatives:
Brand Tyre war-ranty (month) Price per tyre (Rs.)
A 12 1,200
B 24 1,800
C 36 2,100
D 48 2,700

If the company feels that the warranty period is a good estimate of the
tyre life and that a nominal interest rate (compounded annually) of 12%
is appropriate, which tyre should it buy?

14. (a) A diesel engine was installed 10 years ago at a cost of Rs. 50,000. It has a
present realizable market value of Rs.15,000. If kept, it can be expected
to last five years more, with operating and maintenance cost of
Rs. 14,000 per year and to have a salvage value of Rs. 8,000 at the end of
the fifth year. This engine can be replaced with an improved version
- costing Rs. 65,000, which has an expected life of 20 years. This improved
version will have an estimated annual operating and maintenance cost of
Rs. 9,000 and ultimate salvage value ofRs. 13,000. Using an interest rate
of 15%, make an annual equivalent cost analysis to determine whether to
keep -or replace the old engine.

Or
(b) An electronic equipment contains 1,000 resistors. When any resistor fails,
it is replaced. The cost of replacing a resistor individually is Rs. 10. If all
the resistors are replaced at the same time, the cost per resistor is Rs. 4.
The per cent surviving, SCi)at the end of month i is tabulated as follows:
10123456
SCi) 100 96 89 68 37 13 0
Which is the optimum replacement plan?

15. (a) (i) A company has purchased an equipment whose first cost is
Rs. 1,00,000 with an estimated life of eight years. The estimated
salvage value of the equipment at the end of .its lifetime is
Rs. 20,000. Determine the depreciation charge and book value at
the end of various years using the straight-line method of
depreciation. . (6)
(ii) A company has purchased a bus for its officers for Rs. 10,00,000.
The expected life of the bus is eight years. The salvage value of the
bus at the end of its life is Rs. 1,50,000. Find the following using the
sinking fund method of depreciation:
(1) Depreciation at the end of the third and fifth year
(2) Book value at the end of the second year and sixth year. (10)
Or

3 11556
(b) (i) An automobile company has purchased a wheel alignment device
for Rs. 10,00,000. The device can be used for 15 years. The salvage
value at the end of the life of the device is 10% of the purchase
value. Find the following using the double declining balance method
of depreciation:
(1) Depreciation at the end of the seventh year
(2) Depreciation at the end of the twelfth year
(3) Book value at the end of the eighth year (10)
(ii) The first coat of a road laying machine is Rs. 80,00,000. Its salvage
value after five years is Rs. 50,000. The length of road that can be
laid by the machine during its lifetime is 75,000 km. In its third
year of operation, the length of road laid is 2,000 km. Find the
depreciation of the equipment for that year. (6)

4 11556
 Question Paper Code: 21603
B.E./B.Tech. DEGREE EXAMINATION, MAY/JUNE 2013.

Eighth Semester

Mechanical Engineering
I

MG 24511MG811GE 1451/080120038 - ENGINEERING ECONOMICS AND COST

ANALYSISIENGINEERING ECONOMICS AND FINANCE

(Common to Production Engineering)

(Regulation 2008)

(Common to PTMG 2451- Engineering Economics and Cost Analysis for

B.E. (Part-Time) Mechanical Engineering - Seventh Semester - Regulation 2009)

Time : Three hours Maximum: 100 marks

Use of interest tables is permitted.

Answer ALL questions. PART

A- (10 x 2 = 20 marks)

"1. Define opportunity cost.

2. Define PN ratio.

3. State any two uses of Value Engineeri?&".

4. Wha:t is Time Value of Money?

5. What is Cost Dominated Cash Flow Diagram?

6. Define Rate of Return method.

7. What is meant by Economic Life of an Asset?

8. Explain Predictive maintenance.

9. What is Sinking Fund?

10. .What is amorti~ation?

 PART B - (5 x 16 = 80 marks)

11. (a) Write on : Break Even Analysis, Engineering and Economic Efficiency,
costs that 90 into the fixing of product cost. (16) .

Or

(b) (i) From the following information relatirig to Geetha Ltd., you are
required to find out (12)

(1) PNratio;

(2) BEP;

(3) Profit;

(4) Margin of safety.

Total Fixed cost Rs.4,500

Total Variable cost Rs.7,500

Total Sales Rs.15,000

(ii) . Also calculate the volume of sales to earn profit ofRs. 6,000. (4)

12. (a) (1i)/ Explain the criteria for .make or buy decision and its approach. (10)

en) Write the equation for Interest compounding of a capital (Yearly,

half yearly and Quarterly compounding. (6)
Or

(b) The management of a company finds that while the cost of making a
component part is Rs. 10, the same is available in the market at Rs.9
with an assurance of continuous supply.

Give a suggestion whether to make or buy this part. Give also your views
in case the supplier reduces the price from Rs. 9 to Rs.8. (16)

The cost information is as follows :

Particulars Rs.

Material 3.50

Direct Labour 4.00

Other variable expenses 1.00

Fixed expenses 1.50

Total 10.00
 2 21603

PEC/MECH Page 21
13. (a) Explain the concept Cash flow and different methods of comparison of
alternatives. List the merits and Limitation of each method if any.
Or
(b) Calculate the Average rate of return for projects A and B from the
following:
Project A B
Investment Rs. 20,000 30,000
Expected life 4 years 5 years

No salvage value.
Projected Net Income (after interest, depreciation and taxes)
Years Project A Project B
Rs. Rs.
1 2,000 3,000
2 1,500 3,000
3 1,500 2,000
4 1,000 1,000
5 1000
6000 10000

14. (a) (i) What do you mean by Replacement and maintenance Analysis?
State and explain different types of replacement. (12)
(ii) Explain the concept of Life CycleAnalysis cost. (4)

Or
(b) (i) What are the objectives of plant maintenance? Explain different
types of maintenance adopted on an industry. (10)
/
(ii) Explain concept of Challenger and Defender. (6)

15. (a) (i) What is functional Depreciation? (4)

(ii) A company purchased Machinery for Rs.1,00,OOOI.ts installation
costs amounted to Rs.10,000. Its estimated life is 5 years and the
scrap value is Rs.5,OOO.Calculate the amount and rate of
depreciation. (12)

Or
(b) (i) What do you mean by depreciation?· Explain any 4 methods with
example. (10)
(ii) Write on: Inflation, Accelerated Depreciation. (6)

3 21603
 Reg ..No. : L--:I---"---:,---,-----,-1. _'_j 1_J l. L_-1--"--,.I l_~

Question Paper Code 31603

B.E.lB.Tech. DEGREE EXAMINATION, NOVEl\1BER/DECEMBER 2013.

Eighth Semester

Mechanical Engineering

MG 2451!080120G.38/GE 1451IMG 81-ENGINEERING ECONOMICS AND COST

ANAL YSISJENQINEERING.ECONOMICS AND F1NANCE

(Regulation Z008)

(Common to PTMG 2451- Engineering Economics and Cost Analysis fer B.E.
(Part - Time) Seventh Semester - Mechanical Engineering, Regulation 2009)

(Common to Production Engineering)

'time: Three hours Maximum: 100 marks

(Use of Statistical Tables are permitted)

Answer ALL questions.

PART A - (10 x 2 = 20 marks)

1. . ifferentia. te 'technical efficiency' and 'economic efficiency' ..

D .
2. Define break-even point.

3. Mention the criteria for make decision.

4. Mention any two applications of various' interest formulas.

5. What is the basic concept of'present worth method of comparison'?

6. What is the basic concept of 'annual equivalent method of comparison'?

7. List the different types of maintenance.

8. What are the reasons for replacement?

9. What is meant by depredation?

10.. Write any two differences III evaluating alternatives of private and public
sector organisations.
 PART B - (5 x Ie = 80 marks)

11. (a) (i) Mention the factors influencing demand and supply. (8)
(ii) Explain the method of deriving the selling price of a product. (8)

0'1'
(b) (i) In the design of a jet engine part, the designer has a choice of
specifying either an aluminum alloy casting or a steel casting.
Either material will provide equal service, but the aluminum alloy
casting will weigh 1.2 ,kg as compared with 1.35 kg for the steel
casting. The aluminum can be cast Rs.80/kg and the steel for
Rs.35/kg-. The cost of machining per unit is Rs.150 for aluminum
and Rs.170 for steel. Every kg of excess weight is associated with a
penalty of Rs.l/,300 due to increased fuel consumption. Which
material should be specified and what is the economic advantage of
the selection per unit? (8)
(ii) . Explain the steps in process planning. (8)
12. '(a) (i) Mention the basic steps of value engineering. (8)
(ri) A 'per.son deposits 'a sum of Rs 20,000 at the interest rate of 18%
compounded annually for 10 years. Find the maturity value after
10 years. Use single-payment compound amount formula. (8)
Or
(b) (i) Write short notes on the time value of money. (8)
(ll)' A company has to replace a present facility after 15 years at an
outlay of Rs.5,OO,000. It plans to deposit an equal amount at the
end of every year for the next 15 years at an interest. rate of 18%
compounded annually. Find the equivalent amount that must be .
deposited at the end of eV8J'Yyear foJ'.t'he next 15 years. Use equal-
payment series sinking fund formula. . (8)
13. (a) Alpha: industry is planning, to expand its production operation. It has .
identified three different technologies. for meeting the goal. The initial
outlay and annual revenues with respect to each of the technologies are
summarized in table. Suggest the best technology which is to be
implemented based on the present worth method of comparison assuming
20% interest rate, compounded annually. (16)
Initial outlay (Rs.) Annual revenue (R~.) Life (years)
Technology 1 12,00,000 4,00,000 10
Technology 2 20,00,000 6,00,000 10
Technology 3 18,00,000 , 5,00,000 10

Or

2 31603
 (b) A Company is planning to purchas« an .advanced machine centre .. Three
original manufacturers have respcnded to' its tender whose particulars
are tabulated a'Sfollows:
Manufacturer Down payment yea:l1'lyequal No.oiinstallments
installment
eRs.) (Rs.)
1 -5,.oq,OC)O 2,00,000 15
2 4,00,000 3/00 1000 15
3 6,00,000 1,50,000 15 .. '
'Determine the best alternative based an the annual equ iva.lerrt method by
assuming i == 20%, compounded annually. (16)

14. (a) (i) Write short notes on 'economic life' of an @quipment.

(8)
(ii) A firm is considering replac@UJ:entof' equipm.ent, whose .£i.[·sCt OB.t .is
Rs, 4,000 and the scrap value is negligible at the end of any year.
Based on eXperience; it was found that the maiBtemthce cost is zero
during the first year and it increases by ·Rs. 200 every year
thereafter. When should the equipment be replaced if i == O%? (8)
Or
(b) Two years ago, a machine was purchasad at a C0St of Rs. 2,00,000 to be
useful for eight years, Its salvage at the end of its life 1S Rs.25,OOO,The
annual m:aintenam.ce cost is Rs. 25,pOO. The mark.'et value of the present
machine IS ~s.1,20,OOO. Now;, a new ma:chine to eater to the need of the
present machine is available at Rs.l,5C),O'GOto be useful for six years. Its
annual miiintena:nce cost is Rs. 14,000. The salvage value of the 'new
machine is Rs.20,OOO. Using an interest rate of 12%, find whether it is
worth replacing the present machine with the new machine. (16)

3
31603
 Initial coet = Rs; 8, 00, 00,000 . \

Annual power sales == R$. 60,00.000

Annual flcod control savings = Rs, 3P,00,000
Annual irrigation benefits ~R8'. 50,00,000
Annual recreation benefits = Rs. 20.;00,000
Annual operating and maintaining eosc = Rs.30,OO,OOO
Life 0f the project = 50 years ..
Check whether the state government should implement the project
(assume i = 12%). ('16)

PEC/MECH Page 26
 4 '31603

PEC/MECH Page 27
MG6863- ENGINEERING ECONOMICS

QUESTION BANK

SUBJECT CODE: MG6863 YEAR: IV

SUBJECT NAME: ENGINEERING ECONOMICS SEM: VIII

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?

PEC/MECH/QB Page 1
MG6863- ENGINEERING ECONOMICS

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 ENGINEER

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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)

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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 (2 MARKS)

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

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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

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UNIT IV - REPLACEMENT AMD MAINTAINENCE ANALYSES

PART – A (2 MARKS)

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)

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

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(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 (2 MARKS)

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 ?

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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.

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