MG6863 - ENGINEERING ECONOMICS

UNIT 1: INTRODUCTION TO ECONOMICS

1. From the following information, find out the amount of profit earned during the year using
marginal cost technique
Fixed cost =Rs 5,00,000
Variable cost =Rs.10 Per unit
Selling Price =Rs.15 Per unit
Output level =1,50,000 units

2. ESSAAR Industries has the following details:

Fixed cost =Rs 20,00,000
Variable cost per unit =Rs. 100
Selling price per unit =Rs.200
Find the break-even sales quantity and the break-even sales.

3. From following details find out the margin of safety

Sales =Rs.1,00,000
Total costs =Rs 80,000
Fixed costs =Rs 20,000
Net profit =Rs 20,000

4. You are given the following data for the costing year of a factory
Budget Output =1.00,000 units
Fixed expenses =Rs 5,00,000
Variable expenses =Rs.10 per unit
Selling Price =Rs 20 per unit
1. Find the B. P and B. E. S.
2. lf the selling price is reduced to Rs 18 per unit, what will be the new break-even point.

5. From the following details find out (a) Profit volume Ratio (a) BEP. (c) Margin of Safety
Sales =Rs 1,00,000
Total costs =Rs 80,000
Fixed costs =Rs.20,000
Net Profit =Rs 20,000

6. The following information was obtained from a company in a certain year.

Sales =Rs 1,000,000
Variable costs =Rs 60,000
Fixed costs =Rs 30,000
Find the ratio, Break-even point and Margin of safety.

7. 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 9000 units.
Variable per unit =Rs.750
Fixed expenses =Rs 27,00,000
Selling price per unit =Rs 1000
 8. An automobile company has listed out process sequences of a component. The process sequence
are

Sequence Process sequence

1 Rolling – Heating – Shaping - Moulding
2 Rolling – Heating - Moulding
3 All operations are performed with machine A
The details of process time for the components for various operations and their machine hour
rates are listed below:

Machine hour Process Sequence

rate
Operations 1 2 3
(Rs.) Find the
Rolling 400 9 10
most
Heating 450 12 14
Shaping 480 15
Moulding 450 8 7
Machine A 1500 10
economical sequence of operations to manufacture the component.

9. A manufacturing company ltd., has obtained the following details of a particular year.
Fixed cost =Rs 20,00,000
Variable cost/unit =Rs 150
Selling price/unit =Rs.250
Find: 1. B.E.P. and B.E.S
2. If the actual production quantity is 60,000. Find the following:
(a) Contribution (b) Margin of safety by two methods

10. The process planning engineer of a firm listed the sequences of operations as shown below to
produce a component.
Sequence Process Sequence
1 Rolling – Heating – Shaping - Molding
2 Rolling – Heating – Molding
3 All operations are performed with machine A

The details of process time for the components for various operations and their machine hour
rates are listed below:
Operation Machine hour Process sequence
rate (Rs) 1 2 3
Rolling 200 5 5 -
Heating 400 8 14 -
Shaping 350 10 - -
Molding 300 3 3 -
Machine A 1000 - - 8

Find the most economical sequence of operations to manufacture the component.