1 2. State the Law of Supply. 1 3. Explain the factors affecting supply of a commodity. 5 5. Explain the factors affecting demand for a commodity. 5 6. Explain the ‘market mechanism’ phenomenon. 5 7. Explain the per unit cost method of estimation. 5 8. Explain the types of estimates. What do you mean by cost index? 8 9. Explain the process of economic decision making . 5 10. Explain power sizing model of cost estimation. 5 11. Explain the segmenting model of cost estimation. 5 12. Explain the economic problems faced by an engineer with suitable examples. 5 13. “Estimation is the foundation of economic analysis”—Explain. 5 14. Explain the difference between depreciation and obsolescence. 5 15. Explain the cause of depreciation 5 16. Define Break – even point. Develop appropriate expressions for BEP (in number of units) and BEP sales (in rupees) algebraically with proper representation of the elements diagrammatically. 5 17. Discuss about break-even analysis with a short note. 5 18. Calculate the current cost of a piece of equipment that has 50% more capacity than a similar piece of equipment that cost ₹ 30,000 five years ago. The appropriate power-sizing exponent for this type of equipment is 0.8, and the ratio of the cost indexes (current to 5 years ago) is 1.24. 5 19. Explain the cost index model of estimation. 5 20. Miriam is interested in estimating the annual labour and material costs for a new production facility. She was able to obtain the following labour and material cost data: Labour costs: Labour cost index value 10 years ago was at 124 and is 188 today Annual labour cost for a similar facility 10 years ago was ₹. 575,500 Material Costs: Material cost index value was at 544 three years ago and is 715 today Annual material cost for a similar facility was ₹. 2,455,000 three years ago Determine the present annual labour and material cost. 5 21. Miriam has been asked to estimate the today’s cost of a 2500 sq. ft heat exchange system for the new plant being analysed. She has the following data: Her company paid ₹50,000 for a 1000 sq. ft heat exchanger 5 years ago. Heat exchangers within this range of capacity has a power sizing exponent (x) of 0.55.Five years ago the Heat Exchanger Cost Index (HECI) was 1306; it is 1487 today. Calculate the cost as determined by Miriam. 5 22. Five years ago, when the relevant cost index was 120 a nuclear centrifuge cost $ 40,000. The centrifuge had a capacity of separating 1500 gallons of ionized solution per hour. Today, it is desired to build a centrifuge with a capacity of 4500 gallons per hour, but the cost index now is 300. Assuming a power-sizing exponent to reflect economies of scale, x, 0.75, use the power sizing model to calculate the approximate cost (expressed in today’s dollars) of the new centrifuge. 5 23. Suppose that an aircraft manufacturer desires to make a preliminary estimate of the cost of building a 600-MW fossil fuel plant for the assembly of its new long distance aircraft. It is known that a 200-MW plant costs $100 million 20 years ago when the approximate cost index was 400 and that cost index in now 1200. The cost capacity factor for a fossil fuel power plant is 0.79. 5 24. A certain index for the cost of purchasing and installing utility boilers is keyed to 1988, where its baseline value was arbitrarily set at 100. Company XYZ installed a 50,000lb/hour boiler for $525,000 in 2000 when the index had a value of 468. This same company must install another boiler of the same size in 2007. The index in 2007 is 542. Calculate the approximate cost of the new boiler. 5 25. Explain about Improvement and Learning Curve. 5 26. Calculate the time required to produce the hundredth unit of a production run if the first unit took 32.0 minutes to produce and the learning-curve rate for production is 80%. 5 27. A company purchased a machine on 1 April 2017 for ₹ 2,60,000; shipping and forwarding st
charges ₹ 10,000; Import Duty ₹ 12,000; Installation charges ₹ 10,000; Depreciation is to be
charged under diminishing balance method at 1st Year- 10% p.a.; 2nd year- 20% p.a.; 3rd year- 30% p.a. Calculate amount of depreciation and book value each year. 8 28. From the following information calculate the annual depreciation based on historical and replacement cost respectively and show the amount of additional depreciation that should be provided in each year. Cost of machinery ₹ 20,000 Estimated life 4 years Residual Value NIL Inflation factor 10% p.a Use straight-line method for computing depreciation. 5 29. Alpha Associates has the following details: Fixed cost = ₹ 20,00,000 Variable cost per unit = ₹ 100 Selling price per unit = ₹ 200 Find (a) The break-even sales quantity, (b) The break-even sales (c) If the actual production quantity is 60,000, find (i) contribution; and (ii) margin of safety by all methods. 8 30. Consider the following data of a company for the year 1997: Sales = ₹ 1,20,000 Fixed cost = ₹ 25,000 Variable cost = ₹ 45,000 Find the following: (a) Contribution (b) Profit (c) BEP (d) M.S. 8 31. Estimate the overall labor cost portion due to a task that has a learning curve rate of 85% and reaches a steady state value from 16 units of 5.0 minutes per unit. Labor and benefits are ₹ 200 per hour, and the task requires two skilled workers. The overall production run is 20 units. 32. A company takes 10 hours to produce its first four items. What time will be required to produce 64th item? Consider learning curve rate 90%. 5
