Mansoura University 2nd Year Prod.

Engineering

Faculty of Engineering Final Exam – Jan 2013

Prod. Eng. & Mech. Design Dept. Time allowed: 2 hours Engineering Management (1)

Question 1:
Define and give a full discussion for the following:
a) Life cycle costs b) Past and sunk costs
c) Future and opportunity costs d) Direct and indirect and overhead costs
e) Fixed and variable costs

Question 2:
Give a full discussion for the methods used to evaluate projects: (PW – AW – FW – IRR –
ERR)

Question 3:
Give a full comparison for the depreciation accounting methods.

Question 4:
An asphalt plant was purchased 6 years ago for $1,000,000. It is expected to be sold when
it is 12 years old for $250,000 . There is an offer to be sold now. Find the current
depreciation book value (use three different methods).

Question 5:
Assume you are looking for a building in which to locate your professional office, and one
is available for $500,000 . The appraisal is divided into $100,000 for the land and
$400,000 for the building.
The building is new and can be depreciated over a 20–year period at 1.50 delcining balance
method. Salvage value after 20years is $200,000 for the building.

a) In your first year of ownership, how much can you deduct for your depreciation?
b) How much in the second year?
c) How much in the twentieth year?