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Engineering Economics Quiz | Engineering Economics Objective Type Questions and Answers

Questions
21 A leading shoe manufacturer produces a pair of Lebron James signature shoes at a labor cost of P 900.00 a pair and a material cost of P 800.00 a pair. The fixed charges on the business are P 5,000,000 a month and the variable costs are P 400.00 a pair. Royalty to Lebron James is P 1,000 per pair of shoes sold. If the shoes sell at P 5,000 a pair, how many pairs must be produced each month for the manufacturer to break-even?
A 2.590
B 2,632
C 2,712
D 2,890

Answer: 2,632
22 A telephone switchboard 100 pair cable can be made up with either enameled wire or tinned wire. There will be 400 soldered connections. The cost of soldering a connection on the enameled wire will be P 1.65 on the tinned wire, it will be P 1.15. A 100- pair cable made up with enameled wire cost P 0.55 per linear foot and those made up of tinned wire cost P 0.75 per linear foot. Determine the length of cable run in feet so that the cost of each installation would be the same.
A 1,000 feet
B 1,040 feet
C 1,100 feet
D 1,120 feet

Answer: 1,000 feet
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23 A manufacturing firm maintains one product assembly line to produce signal generators. Weekly demand for the generators is 35 units. The line operates for 7 hours per day, 5 days per week. What is the maximum production time per unit in hours required of the line to meet the demand?
A 1.0 hour per unit
B 1.2 hours per unit
C 1.4 hours per unit
D 1.6 hours per unit

Answer: 1.0 hour per unit
24 A manufacturer produces certain items at a labor cost of P 115 each, material cost of P 76 each and variable cost of P 2.32 each. If the item has a unit price of P 600, how many units must be manufactured each month for the manufacturer to break even if the monthly overhead is P428,000
A 1,033
B 1,037
C 1,043
D 1,053

Answer: 1,053
25 The Saudi Arabian Oil Refinery developed an oil well which is estimated to contain 5,000,000 barrels of oil at an initial cost of $ 50,000,000. What is the depletion charge during the year where it produces half million barrels of oil? Use Unit or Factor method in computing depletion.
A $ 5,000,000.00
B $ 5,010,000.00
C $ 5,025,000.00
D $ 5,050,000.00

Answer: $ 5,000,000.00
26 Shell Philippines, a multinational company, has a total gross income for a particular year of P 50,000,000. The taxable income after taking all deductions except for depletion is P 18,500,000. What is the allowable depletion allowance for that particular year? Take percentage of gross income for oil as 22%.
A P 9,358.41
B P 9,228.45
C P 9,250.00
D P 9,308.45

Answer: P 9,250.00
27 An asset is purchased for P 9,000.00. Its estimated economic life is 10 years after which it will be sold for P 1,000.00. Find the depreciation in the first three years using sum-of-years digit method
A P 3,279.27
B P 3,927.27
C P 3,729.27
D P 3,792.72

Answer: P 3,927.27
28 ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method.
A 7 eyars
B 8 years
C 9 years
D 10 years

Answer: 9 years
29 A machine costs of P 8,000 and an estimated life of 10 years with a salvage value of P 500. What is its book value after 8 years using straight line method?
A P 2,000.00
B P 2,100.00
C P 2,200.00
D P 2,300.00

Answer: P 2,000.00
30 A VOM has a selling price of P 400. If its selling price is expected to decline at a rate of 10% per annum due to obsolescence, what will be its selling price after 5 years?
A P 222.67
B P 212.90
C P 236.20
D P 231.56

Answer: P 236.20
31 A P 1, 000, 6% bond pays dividend semiannually and will be redeemed at 110% on June 21, 204. It is bought on June 21, 2001 to yield 4% interest. Find the price of the bond.
A P 1,122.70
B P 1,144.81
C P 1,133.78
D P 1,155.06

Answer: P 1,144.81
32 A P 1,000,000 issue of 3%, 15-year bond was sold at 95%. What is the rate of interest of this investment?
A 3.0%
B 3.4%
C 3.7%
D 4.0%

Answer: 3.0%
33 Miss Calledo deposited P 1,000, P 1,500 and P 2,000 at the end of the 2nd year, 3rd year and 4th year, respectively in a savings account which earned 10% per annum. How much is in the account at the end of the 4th year?
A P 4,880.00
B P 4,820.00
C P 4,860.00
D P 4,840.00

Answer: P 4,860.00
34 A young engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan?
A P 6,999.39
B P 6,292.93
C P 6,222.39
D P 6,922.93

Answer: P 6,922.93
35 A person buys a piece of lot for P 100,000 downpayment and 10 deferred semi-annual payments of P 8,000 each, starting three years from now. What is the present value of the investment if the rate of interest is 12% compounded semi-annually?
A P 142,999.08
B P 143,104.89
C P 142,189.67
D P 143,999.08

Answer: P 143,999.08
36 A man loans P 187,400 from a bank with interest at 5% compounded annually. He agrees to pay his obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual payments.
A P 43,600.10
B P 43,489.47
C P 43,263.91
D P 43,763.20

Answer: P 43,763.20
37 What is the present worth of a year annuity paying P 3,000.00 at the end of each year, with interest at 8% compounded annually?
A P 7,654.04
B P 7,731.29
C P 7,420.89
D P 7,590.12

Answer: P 7,731.29
38 A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment?
A P 2,500.57
B P 2,544.45
C P 2,540.56
D P 2,504.57

Answer: P 2,504.57
39 What annuity is required over 12 years to equate with a future amount of P 20,000? Assume i= 6% annually.
A P 1,290.34
B P 1,185.54
C P 1,107.34
D P 1,205.74

Answer: P 1,185.54
40 What is the present worth of a P500 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 10 %?
A P 727.17
B P 717.17
C P 714.71
D P 731.17

Answer: P 717.17

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