PART A

1. Define: Law of supply. 2. Write any four factors that affect Demand 3. What is opportunity cost? 4. What is elasticity of Demand? 5. What do you mean by Make or Buy Decisions? 6. What is meant by value analysis? 7. What are the Different types of values? 8. What is present worth factor? 9. What are the advantages of Rate of Return? 10. Calculate the present worth of the following payments Rs 5000 in year 3, Rs.10,000 in year 5. 11. What is elasticity of Demand? 12. What do you mean by Make or Buy Decisions? 13. Define: Elasticity of supply. 14. Define: Variable cost.
15. What is value engineering 16. Define Single payment compound amount factor

17. List out the advantages of cash flow analysis? 18. Define obsolescence. 19. What is preventive maintenance?. 20. Define: Book value 21. What is opportunity cost? 22. Define: P/V ratio
23. Define: Single payment present worth factor 24. Define the time value of money. 25. List out the limitations of cash flow analysis?

26. How is rate of return method useful in evaluating the alternatives? 27. What do you mean by Defender? 28. Define the economic life of an equipment. 29. List out the procedure to adjust inflation

30. What is sinking fund method of Depreciation?

PART B
1 a(i) Ex plain the process of material selection in new product development (ii) From the following details, calculate the break-even point. What will be the selling price per unit if break-even point to be brought to 900 units: Variable cost per units Rs 750, Fixed expenses Rs 27,00,000, Selling price per unit Rs 1,000. (b) The fixed cost for small-scale industry is Rs.100000/-and variable cost /unit is Rs.50/-. The expected sales are Rs.2, 00,000/-. The price of each unit is Rs.250/-. Find (i) The profit (ii) B.E.Q (iii) If a profit target of Rs . 8000 is planned, what is the turnover required.
2 a) . (i) Bring out the scope of engineering economics with appropriate examples (ii) A concern manufacturing a domestic appliance proposes to put up an improved model in market and the selling price for the same to be decided .The selling price will cover the overheads and ensure the proportion of profit on sales as before.The material in the new model will cost Rs 4000 and the direct wages would be Rs 2000.Following figures relate to the previous year: Stock material on 1st April 2006 Rs 2,00,000 Stock material on 31 st March 2007 Rs 2,20,000 Purchase of raw material in this period Rs 5,20,000 Manufacturing wages Rs 1,60,000.Works overhead Rs 80,000 Administrative and sales overhead Rs 80,000 Sales during the year Rs 9,02,000. Suggest a selling price .Overhead absorption base on % of direct labour.

(b) Explain the types of Elasticity of supply?

3 A manufacturer sells his products for Rs.5 per piece. The fixed cost and variable cost are Rs.60000/- and Rs.2/unit respectively. Find, (i)B.E.P (ii) To earn a profit of Rs.10000/- an additional cost of Rs.3000/- is required on advertisement. What are the minimum sales volume required? (iii) What is the sales volume if the profit is doubled? (b) Explain about break-even analysis with break-even chart
4 ) What are the types of value functions? Explain them with examples (b) (i) Explain the steps of value engineering (8) (ii) Discuss the advantages and application areas of value engineering (8) 5 (a)(i) What is uniform gradient conversion? Illustrate with an example. (8). (ii) What is value engineering? With suitable example, explain the various phases of value engineering job plan. (8) 2

(b) (i) What is time value of money? How is it useful in taking investment related decision?
(ii) Compute the present value of Rs.1000 receivable 6 years hence if the rate of discount is 10%? (8+8) 6 a) 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 of Rs 120 per unit and variable overhead cost of Rs 30 per unit .The annual fixed cost associated with the unused capacity is Rs 2,40,000.Demand over the next year is estimated at 4000 units. (i)Should company make the gears or continue to buy? (ii)Suppose the capacity could be used by another department for the production of the same pump components that would cover its fixed and variable cost and contribute Rs 90,000 to profit. What would be more advantageous .gear production or pump components production? (b) Define the concept of value engineering. List out the aims and steps of value engineering. 7. a) . Machine A operated manually costs Rs.32,000/- while an automatic machine B costs Rs.50000/- . Both of the machines have a life of 4 years. Operating cost for m/c A is Rs.40000/- per year and for m/c B R.30000/- per year. Which m/c shall be considered in purchasing, if 10% interest and present worth factor are considered b) Discuss with example present worth method and future worth method of comparison of alternatives

8. a) . A company that manufactures amplified transducers is trying to divide between the machines shown below. Compare them on the basis of annual worth using an interest rate of 15 . 5 per year Variable speed Dual speed First cost , Rs 4,50,000 2,40,000 Annual operating cost Rs 3,10,000 3,50,000 Salvage value , Rs 1,00,000 80,000 Life years 8 6 Overhaul in years 2 and 4 , Rs - 60,000 , Overhaul in years 5 , Rs 1,20,000 b) Compare annual equivalent method and rate of return method of comparing alternatives with appropriate examples

9 a) . Consider the following mutually exclusive alternatives .Particulars A COST ANNUAL BENEFIT USEFUL LIFE Rs.4000 Rs.640 20 B Rs. 9000 Rs. 960 20

Using a 15% interest rate , determine which alternative should be selected based on the future worth method of comparison. b) (i) Discuss rate of return method and its advantages
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(ii) A person invests a sum of Rs.2,00,000 in a business and receives equal net revenue of Rs.50,000 for the next 10 years. At the end of 10th year, the salvage value of the business is Rs.25,000. Find the rate of return of the business.

10. (a) (i) (Explain the factors to be considered for replacing equipments. (ii)Distinguish between break down maintenance and preventive maintenance (b) (i) How will you determine the economic life of an asset (ii) Explain capital recovery with return 11 A) i) What is defender challenger concept in replacement? Illustrate with an example. (ii) Explain the causes for replacement of assets, in detail with examples (b) Analyze the various types of maintenance and their relative merits and demerits 12. (a) (i) Explain the reasons for replacement and various methods of replacement. (ii) Explain the guidelines for replacement analysis. (10+6=16marks) (b) Analyze the various types of maintenance and their relative merits and demerits. 13. a) (i) What is economic life of an asset?How to determine it ?Explain (ii) The cost of a machine is Rs 1,60,000 and its scrap value is Rs 40,000. Estimate life 5 years .Using sum of years digits method ,determine depreciation charges for each year. (6+10) b) (i) Write about the procedure to adjust inflation (ii) Give out examples on comparison of alternatives and determination of economic life of an asset 14. a) (i) How to adjust inflation in evaluating public alternatives? Explain the procedure. (ii) Find the depreciation annuity by annuity method after three years, when the initial cost of the machine is Rs 8,00,000 an salvage value at the end of three years is Rs 4,00,000.Rate of interest 10 % (6+10) b) Find out the depreciation annuity by annuity charging method after 3 years when the cost of the machine is Rs.80000 and scrap value is Rs.40000, Rate of interest is 5%.Also calculate the residual value of the asset after 2 years (16)

15 a) (i) Analyse the causes and objective behind the provision of depreciation. (ii) Original cost of the machine Rs.10000/- ,Life time 5 years, Scrap value Rs 1000/-Find out the rate of depreciation for the machine using straight line method. (8+8) b) (i) A machine was purchased for Rs.12, 00,000/- and the expected life of the machine is 8 years. Its scrap value is Rs.2, 00,000/-. Find out the cost of depreciation for each year and book value for the 2nd and 6th year. (ii) A milling machine is purchased for Rs100000/ and its scrape value is Rs25000/ after 10 years. If the depreciation is charged by Diminishing
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Balance Method, find the percentage by which the value of the milling machine is reduced every year and depreciation fund after two years and 7th year. (16)