Institute of Chemical Engineering & Technology

Assignment

Chemical Plant Design

“MCQs of Chapter#6 Costing and evaluation”

Submitted to:

Prof. Dr. Mahmood Saleem

Submitted By:

Shahzeb Butt CE09-10E26

M. Hassan Saleem CE09-10E28
Waheed-ur-Rehman CE09-10E29
Anas Nadeem CE09-10E30
Shahid Sarfraz CE09-10E32
Ziad Akram CE09-10E33
Hafiz Usman CE09-10E34
Umar Farooq CE09-10E35
1. When more information has been developed a professional__________engineer will be able to
develop more accurate economics.
a) Production
b) Design
c) Cost
d) Maintenance
2. The revenue and variable costs of production are obtained by __________ the product, feed or
utility flow rates by the appropriate prices.
a) Adding
b) Dividing
c) Subtracting
d) Multiplying
3. In most cases how long will it take for a project to go through the phases of design, procurement
and construction before its production?
a) 6-12 month
b) 3-4 years
c) 1-3 years
d) 2-4 years
4. Project life of the plant is usually assumed(in most cases)__________ years :
a) 10-20
b) 05-10
c) 15-30
d) 50-60
5. __________ of past prices is a good method of capturing long term trends.
a) Logarithmic regression
b) Linear regression
c) Hyperbolic regression
d) Parabolic regression
6. Forecasting of margins is the method used widely in the__________ industry.
a) Fuels
b) Petrochemicals
c) Both a & b
d) None of the above
7. The statistical distribution of the price model involves taking the __________price, adjusted for
inflation, over a recent period.
a) Log
b) Anti-log
c) Average
d) Sine
8. In the same industry, if some product B of that plant is the raw material for other section A of
the same plant, the money that A pays to the B is called as
a) Purchase price
 b) Transfer price
c) Sale price
d) None of these
9. The __________ gives target for the minimum requirements of hot and cold utility.
a) Service analysis
b) Utility analysis
c) Pinch analysis
d) None of these
10. Fired heaters are used for process heating to about:
a) 250℃
b) 350℃
c) 450℃
d) 550℃
11. __________is the most widely used heat source on most chemical plants.
a) Dow-Therm oil
b) Natural gas
c) Furnace oil
d) Steam
12. High pressure steam is typically at about:
a) 10 bar
b) 20 bar
c) 30 bar
d) 40 bar
13. The cost of the plant itself include in
a) ISBL investment
b) OSBL investment
c) Contingency charges
d) None of these
14. Which of the cost is involved is is involved in ISBL investment
a) Fencing
b) Gatehouse
c) Landscaping
d) Construction insurance
15. For typical petrochemical projects offsite cost are usually between
a) 20% and 50%
b) 10% and 20%
c) 80% and 90%
d) 50% and 60%
16. If the site infrastructure is in need of repair then offsite cost will be
a) Higher
b) Remains same
c) Lower
 d) None of these
17. Contractor’s profit is involved in
a) Engineering cost
b) Working capital
c) Contingency cost
d) ISBL COST
18. Contingency charges are extra cost added into the project budget to allow for
a) Changes in project scope
b) Changes in price
c) Labour disputes
d) All of these
19. Variable cost of production that includes
a) Raw material consumed by the process
b) Packaging and shipping effluent disposal
c) Both of the above
d) Sales and marketing cost

20. Property taxes and insurance includes about ______ percent of ISBL cost
a) 9
b) 2
c) 5
d) 0
21. Sales and marketing cost is involved in
a) Variable cost
b) Engineering cost
c) Fixed cost of production
d) None of these
22. Revenues for a project are the incomes earned from sales of
a) Main product
b) By product
c) Both of these
d) None of the above
23. Gross margins equals to revenues minus
a) Taxes
b) Gross profit
c) Raw material cost
d) None of these
24. Gross profit equals to main product revenues minus
a) CCOP
b) VCOP
c) FCOP
d) All of these
25. Net profit=gross profit-_______
a) Main product revenues
b) Raw material cost
c) Taxes
d) All of the above
26. The scrap value can be estimated weight and is usually less than _______ percent
a) 10
b) 6
c) 7
d) 2

27. The exponent n in historic cost data equation is usually between

a) 0.8 to 0.9
b) 8 to 9
c) 0.1 to 0.2
d) None of these
28. Sixth tenth rule equation lies in
a) Historic cost data
b) Step count method
c) Both of these
d) None of these

29. In the UK the main rate of corporation tax is 28 % for companies with profit greater than
________ million per year at the time of writing.
a. £1.2
b. £1.5
c. £2.5
d. £3.0
30. The amount of tax can be calculated by multiplying the taxable income with
a. Gross profit
b. Tax allowances
c. Tax rate
d. Depreciation
31. The govt. often provide incentive to encourage companies to make capital investment which
incentive is common
a. Bonus
b. Profits
c. Dividends
d. Tax Allowances
32. UK uses declining balance depreciation rate for building and structure is
a. 4 %
b. 6 %
 c. 10 %
d. 25 %
33. According to the IRS publication 946 for roads docks and civil infrastructure require recovery
period of
a. 5 years
b. 10 years
c. 15 years
d. 20 years
34. In annual report for different companies, financial information contain
a. Balance sheet
b. Income statement
c. Cash flow statement
d. All of above
35. Depreciation is
a. Cash charges
b. Capital charges
c. Non-cash charges
d. All of above
36. For most corporation in European union and USA the cost of equity is in the range of
a. 5-10%
b. 10-20%
c. 20-25%
d. 25-30%
37. Simple pay-back time=
a. Net annual profit/stockholders equity
b. Net annual profit/total assets
c. Net annual profit/total investment
d. Total investment/average annual cash flow
38. The economic analysis of a project can only be based on the best estimates that can be made of
a. Investment required
b. Cash flows
c. Both a & b
d. None
39. A sensitivity analysis is a way of examining the effect of uncertainties in the _________ on the
viability of the project. (forecast)
40. A sensitivity analysis gives some idea of the degree of risk involved in making judgement on the
_______________________ of the project. (forecast performance)
41. Parameters to study in the sensitivity analysis are
a. Varying the production rate
b. Unexpected difficulties in selling the full volume of product
c. Maintenance or Operations problems
d. All of the above
42. In a more formal analysis, __________ are used to examine the effect of variation in all of the
parameters simultaneously
a. Integral methods
 b. Derivative methods
c. Statistical methods
d. All of above
43. The minimum contingency charge of ISBL plus OSBL cost for all projects is
a. 5%
b. 10%
c. 20%
d. 30%

44. Cost of design and engineering, the plant purchasing procurement and construction supervision
% of direct capital cost.
(a) 30-40% (b) 20-30% (c) 10-20% (d) 50-90%
45. PPC stands for
(a) Physical process cost (b) Physical plant cost (c) Process plant control (d) None
46. PPC=
(a) PCE(1+ f1+….f6) (b) PCE(1+ f1+….f9) (c) PCE(1+ f1+….f8) (d) None
47. For horizontal pressure vessel we need to convert volume into length and
(a) Diameter (b) width (c) height (d) None
48. Contractor’s fees ranges from
(a) 5-10 % (b) 10-15% (c) 15-20% (d) 20-25%
49. Process type
(a) Fluid (b) Solid (c) Fluid-Solid (d) All of above
50. Contingency allowances typically ranges from direct cost
(a) 5-10 % (b) 10-15% (c) 15-20% (d) 20-25%
51. The term “battery limits” is used to define
(a) Contractor’s responsibility (b) In contractor’s responsibility

(c) a & b (d) None

52. The utilities and ancillary equipment said to be

(a) outside the battery limits (b) inside the battery limits (c) None

53. Design pressure of the vessel should be above the operating pressure

(a) 10% (b) 20% (c) 30 % (d) 40%

54. The meaning of "C¿ F ¿ " is?

a) Total plant ISBL capital cost
b) Capital cost
c) Individual cost
d) None of these
55. F mis the ratio of:
a) Purchased cost of item/Purchased cost of item in carbon steel
 b) Purchased cost of item in exotic material /purchased cost of item
c) Purchased cost of item in exotic material /purchesd in carbon steel co item st of
d) None of above
56. The factorial method of cost estimation is based on ?
a) Plant layout
b) Purchased cost of equipment
c) Total cost
d) Material of costruction
57. In the equation' ce=a +bsn ' ' s' is ?
e) Size parameter
f) Total cost
g) Individual cost
h) None of above
58. Tcop =?
a) 3* material cost
b) 2*material cost
c) 4*material cost
d) 5*material cost
59. The accuracy and reliability of an estimate can be improved by ?
a) Estimating cost
b) Estimating cost of equipment only
c) Dividing the sub-units into process
d) None of above