BSEM Engineering Economics & Cost Estimation 2

Question 1

Which type of cost remains constant regardless of changes in production or activity level?

Accepted Answer

Fixed cost

Answer

Variable cost

Answer

Marginal cost

Answer

Incremental cost

Question 2

The Internal Rate of Return (IRR) is best defined as:

Accepted Answer

The discount rate at which NPV equals zero

Answer

The ratio of annual profit to total investment

Answer

The average return on assets over a project's life

Answer

The minimum attractive rate of return set by management

Question 3

A project's 'life cycle cost' includes which of the following?

Accepted Answer

All costs from design through disposal, including operation and decommissioning

Answer

Only initial capital and construction costs

Answer

Only operating and maintenance expenses

Answer

Only labor and material costs during construction

Question 4

What is the break-even point in engineering economics?

Accepted Answer

The production level at which total revenue equals total cost

Answer

The point where marginal cost exceeds marginal revenue

Answer

The level of investment that maximizes return on equity

Answer

The moment when depreciation expense equals salvage value

Question 5

Overhead costs in a construction project are best described as:

Accepted Answer

Indirect costs not directly attributable to a single work item

Answer

Direct material costs tied to specific work activities

Answer

Profit margin added to direct costs

Answer

Equipment purchase prices

Question 6

Which estimating technique divides a project into individual work packages and sums their costs to determine total project cost?

Accepted Answer

Bottom-up estimating

Answer

Analogous estimating

Answer

Parametric estimating

Answer

Expert judgment