MG6863  Engineering Economics Important Questions April May 2016

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MG6863 Engineering Economics

Unit 1

1. What is cost volume profit analysis? State the assumptions & applications of breakeven analysis.
2. Explain the process of material selection in new product development
3. Analyse the various types of elasticity of demand and their usefulness
4. Discuss the flow of goods, services, resources and money payment in a simple economy
5. Explain in detail the different elements of cost
6. A firm has a fixed of Rs50,000 selling price per unit is Rs50 and variable cost per unit is Rs25. Present
Level of production is 3,500 units
(A) determine break-even point in terms of volume & sales value (B) calculate margin of safety
7. Engineers at General motors want to investigate alternative design. Both the design will serve
equally well and will involve the same material and manufacturing cost expect for the lathe and
grinder operations. Design A will require 20 hours of lathe time and 8 hours of grinder time per
10,000 units. Design B will require of lathe time and 22 hours of grinder time per 10,000 units. The
operating cost of the lathe including labour is Rs.400 per hour. The operating cost of the grinder
including labour is Rs.300 per hour. Which design should be adopted if 10,00,000 units are required
per year and what is the economic advantage of the best alternative.

Unit II

1. What is value engineering? With a suitable example, explain the various phases of value
engineering
2. What is uniform gradient conversion? Illustrate with an example.
3. What is process planning? What are its objectives? Explain the various steps in process planning?
4. What is time value of money? How is it useful in taking investment related decision?
5. Explain the criteria for make or buy decision and its approach.
6. A person is planning for his retired life. He has 10 more years of service. He would like to deposit
Rs8500 at the end of the first year and thereafter he wishes to deposit the amount with an annual
decrease of Rs500 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
7. A manufacturing company has extra capacity which can be used to produce gears that the company
has been buying for Rs300 each. If the company makes the gears it will incur material cost of Rs90
per unit, labour cost of Rs120 per unit and variable overhead cost of Rs30 per unit. The annual fixed
cost associated with unused capacity is Rs240000. 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 Rs90000 to profit. Which Would be more advantageous, gear
production

Unit III

1. Explain all the rate of return methods
2. What is annual equivalent method? Explain with example.
3. Write about the revenue dominated cash flow diagram and cost dominated cash flow diagram.
4. The cost of erecting an oil well is Rs.15000000. the annual equivalent yield from the oil well is
Rs.3000000. The salvage value after its useful life of 10 years is Rs.200000. 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
5. Discuss with example. Present worth method and future worth method of comparison of
alternatives.
6. Explain the concept cash flows and different methods of comparison of alternatives. List the merits
and limitation of each method if any

Unit IV

1. What is defender challenger concepts in replacement? Illustrate with an example
2. Explain the causes for replacement of assets in detail with examples.
3. Explain with example the simple probabilistic models for the items which fail completely?
4. Discuss the factors on replacement problem?
5. Discuss the reasons for replacement and the different types of maintenance and distinguish
between breakdown and preventive maintenance
6. What are the objectives of plant maintenance? Explain different types of maintenance adopted on
an industry
7. Machine A costs Rs.90000 and the operating costs are estimated at Rs.2000 for the first year
increasing by Rs.20,000 per year in the second and subsequent years. Machine B COSTS Rs100000
and operating costs are Rs.4000 for the first year, increasing by Rs.8000 in the second and
subsequent years. If we now have a machine of type A, should we replace it with B? Assume that
both machines have no resale value and future costs are not discounted.
8. A firm is considering replacement of an equipment whose first cost is Rs1750 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 increased by Rs100 every year thereafter(a) when should the equipment be
replaced if i = 0% (b) when should the equipment be replaced if I =12%

Unit V

1. Explain the various methods of depreciation

2. Explain the procedure to adjust inflation and discuss the determination of economic life of assest.
3. How will you evaluate the public alternatives? Explain in detail.
4. Explain and distinguish between moderate, galloping and hyperinflation. How do these kinds of
inflation affect the economic growth of a nation?
5. The cost of a machine is Rs160000 and its scrap value is Rs40000. Estimated life 5 years. Using sum
of years digits method, determine depreciation charges for each year
6. A company purchased machinery for Rs100000. Its installation costs amounted to Rs10000. Its
estimated life is 5 years and the scrap value is Rs5000. Calculate the amount & rate of depreciation.
7. The alpha drug company has just purchased a capsulating machine for Rs.2000000. The plant
engineer estimates that the machine has a useful life of 5 years and a salvage of Rs.25000 at the end
of its useful life. Compute the depreciation schedule for the machine by each of the following
depreciation methods. (a) Straight line method of depreciation. (b) Sum of the years digit method of
depreciation.

8. Discuss (a)declining balance method of depreciation (b)sinking fund method of depreciation.

MG6863 Engineering Economics – Part B ( impotent 16 mark ) – Download PDF >>

Anna University ,Chennai
Semester : Eight
Department Of Mechanical Engineering
Subject code : MG6863
Subject name : Engineering Economics
Edition : 2017
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