Engineering Economics MCQs

Question 1

Pick up the correct statement from the following:

Accepted Answer

Both (A) and (B)

Answer

Over head rate = $$\frac{{{	ext{total over head in rupees for period}}}}{{{	ext{direct labour in rupees for period}}}}$$

Answer

Over head cost per unit = Overhead ratio × direct labour cost/unit

Answer

Neither (A) nor (B)

Question 2

Pick up the method used for project evaluation and selection in capital budgeting from the following:

Accepted Answer

All the above

Answer

Payback period

Answer

Internal ratio of return

Answer

Net present worth

Question 3

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

Ratio analysis is the procedure of determining and interpreting numerical relationship of various items of the financial statement

Answer

All financial ratios are obtained by relating two sets of information contained in a Single financial statement

Answer

The relationship between two accounting figures expressed mathematically, is known as a financial ratio

Question 4

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

The ability of a company to meet obligations which are likely to mature in short term, is called liquidity

Answer

The liquidity ratio may be defined as a relationship of current liabilities and current assets and advances

Answer

The liquidity ratios are used to indicate the financial position of the firm

Question 5

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

The capital required to get a project started is the first cost

Answer

The first cost is a single cash flow or a series of cash flows that are made in the beginning of the activity's life span

Answer

The first cost of purchasing a car is the sum of the down payment, taxes and dealers charges

Question 6

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

The capital required to get a project started, is called first cost

Answer

The costs associated with a new or existing project that remain unaffected by the changes in activity level over the normal range of operation of the project, are called fixed costs

Answer

The group of costs that vary proportionately to the changes in the activity level of a new or existing project are called variable costs

Question 7

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

The change in the amount of money over a given time period is called 'time value' of money, a most important concept in engineering economy

Answer

The manifestation of the time value of money is termed as interest

Answer

Interest on borrowing = present amount owed - original loan

Question 8

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

The difference between sales revenue and cost of goods sold, is known as 'Gross Profit'

Answer

The gross profit percentage is the average profit margin obtained on goods sold

Answer

The relationship of contribution to sales is known as contribution ratio

Question 9

Pick up the correct statement from the following:

Accepted Answer

All of these

Answer

The financial ratio summarizes some aspect of the firm's financial condition at the time of preparing a balance sheet

Answer

Both the numerator and denominator of financial ratios come directly from the balance sheet

Answer

Income statement ratios compare a flow item from the income statement to another flow item form the income statement