DEPARTMENT OF MECHANICAL ENGINEERING QUESTION BANK Subject Name: ENGINEERING ECONOMICS AND COST ANALYSISS Year/Sem:IV/ VIII

UNIT – I INTRODUCTION TO ECONOMICS PART A
1. What is elasticity of Demand? 2. What is opportunity of cost? 3. Define the term cost? 4. What you mean by marginal cost? 5. Explain marginal costing? 6. Give a short note on sunk cost? 7. Define the term costing? 8. What is break even point? 9. Give a short note on variable cost? 10. What is contribution?

PART B
1. Bring out the Scope of engineering economics with appropriate example. 2. Explain the process of material selection in new product development. 3. Discuss the scope of engineering economics with NANO technology as a new science introduced in the industry 4. Explain why the no profit, no loss factor concept is considered more significant in cost profit Analysis of a product 5. (a)Discuss the principles of Engineering economics (8) (b)Explain in detail the engineering economics procedure (8)

UNIT – II VALUE ENGINEERING PART A 1. What do you mean by ‘Make or Buy Decisions’ 2. What are the difference approaches followed in make or buy decisions? 3. What is meant by value analysis/ value engineering? 4. Write any four objectives of value analysis 5. Differentiate the value analysis/ value engineering 6. List out the advantages of value analysis 7. Explain the time value of money 8. What is sinking fund factor? 9. What is uniform gradient conversion? 10. How much will a piece of property have to increase in value over the next 5 years, if it is to earn 10% per year on the purchase price?. PART B 1. A manufacturing company has extra capacity which can be used to produce gears that the company has been buying for Rs.300 each. If the company makes the gears, it will incur material cost of Rs.90 per unit, labour cost Rs. 120 per unit. The annual fixed cost associated with the unused capacity is 2,40,000. Demand over the next year is estimated at 4000 units.

(a) Should the company make the gears or continue to buy (b) Suppose the capacity could be used by another department for the production of some pump components that would cover its fixed and variable cost and contribute Rs.90,000 to profit. Which would be more advantages, gear production or pump components production? 2.What is make or buy decision? Discuss the operational issues associated with the business proposals related with make or buy decision with respect to profitability. 3.What is value engineering? With suitable example, explain the various phases of value engineering job plan 4.How does the study of value engineering help a business manager is decision making? Illustrate your answer with examples 5.a)What is uniform gradient conversion? Illustrate with an example. (8) b)Explain the various procedures to conduct value engineering (8) UNIT III CASH FLOW PART A 1.What is revenue dominated cash flow? 2.What is cost dominated cash flow? 3.What is annual equivalent method of comparing alternatives? 4.Mention the various rate of return method 5.What is rate of return? 6.What is present worth method? 7.What is future worth analysis? 8.What is equivalent method? PART B 1.Explain the importance of Cash flow and how does the financial statement analysis play a role in the internal economical environment for an organization. 2.Explain all the rate of return methods 3.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 Rs. 12,000 Rs. 9000 Salvage valve 0 Rs. 20,000 Life years 2 4 4. A company that manufactures amplified transducers is trying to divide between the shown below. Compare them on the basis of annual worth using an interest rate of 15% year. Variable speed Dual speed First cost 4,50,000 2,40,000 Annual operating cost 3,10,000 3,50,000 Overhaul in years 2 and 4 ---------- 60,000 Overhaul in year 5 1,20,000 80,000 Life, years 8 6 5.a) How to adjust inflation in evaluating public alternatives? Explain the procedure (8)

b) What is economic life of an asset? How to determine it Explain (8) UNIT IV REPLACEMENT AND MAINTENANCE ANALYSIS PART A 1.What is replacement analysis? 2.What is by gradual failure? 3.Define economic service life of an asset? 4.What are the types of replacement problem? 5.Explain capital recovery cost. 6.Explain operating costs. 7.Explain annual equivalent total cost. 8.Explain sunk cost. 9.What is meant by maintenance? 10.Name the types of maintenance. PART B 1.Explain the causes for replacement of assets, in detail with examples. 2.What is defender challenger concept in replacement? Illustrate with example . 3.Explain the objective, procedure and advantages of preventive maintenance. 4.Explain with example the simple probabilistic models for the items which fail completely. Initial cost of a machine is Rs. 6,00,000 with other details as below: Year 1 2 3 4 5 Resale value 4,20,000 3,00,000 2,04,000 1,44,000 96,500 Cost of spares 40,000 42,700 48,800 57,000 68,000 Cost of labour 1,40,000 1,60,000 1,80,000 2,10,000 2,50,000 Determine the optimum period for replacement of the machine. UNIT V DEPECIATION PART A 1.Define the term Depreciation? 2.Mention the various methods used in depreciation calculation? 3.What are the causes of depreciation? 4.Write five reasons for providing depreciation? 5.What is the main objectives of evaluation of public alternatives? 6.Define the term benefit cost ratio? 7.Define the term inflation? 8.What are the types of inflation? 9.What is service output method of depreciation? 10.What is Book value? 11.What is evaluation of public alternatives? PART-B 1.a)How to adjust Inflation in evaluating public alternatives? Explain the procedure (8) b)Find the depreciation annuity by annuity method after three years. When the initial cost of the machine is Rs 8,00,000 and salvage value at the end of three years is Rs 4,00,000. Rate of

interest 10%. (8) 2.a)What is economic life of an asset? How to determine it ? Explain. (8) b)The cost of a machine is Rs 1,60,000 and its scrap value is Rs 40,000 Estimated life five years . using sum of years digits method, determine depreciation charges for each year (8). 3.Discuss all the methods of depreciation? 4.Explain and distinguish between moderate, galloping and hyperinflation. How do these kinds of inflation affect the economic growth of a nation? 5.Explain the distinguish between the private and public for evaluating alternatives in organization?