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## University of Mumbai Semester 3 (SE Second Year) Chemical Engineering Economics Revised Syllabus

University of Mumbai Semester 3 (SE Second Year) Chemical Engineering Economics and their Unit wise marks distribution

### Units and Topics

# | Unit/Topic | Marks |
---|---|---|

100 | Introduction to Basic Principles of Economics | - |

200 | Demand and Supply Analysis | - |

300 | Economics of Production and Growth | - |

400 | Cost Accounting | - |

500 | Interests and Investment Costs | - |

600 | Taxes and Insurance | - |

700 | Cost Estimation | - |

800 | Profitability, Alternative Investments and Replacements | - |

Total | - |

## Syllabus

100 Introduction to Basic Principles of Economics

- Economics-various definitions
- Concept of Need – hierarchy
- Market - Concept of Price determination under particular market conditions – perfect competition market & monopoly market, causes
- Price Discrimination-concept, types
- Concept of Cost-total cost, fixed and variable cost, direct and indirect cost
- Cost index – definition, types

200 Demand and Supply Analysis

- Law of demand-assumptions and exceptions
- Demand schedule and demand curve
- Determinants of demand
- Changes and variations in demand
- Demand elasticity-definition, types, methods of measurement of elasticity, Income elasticity of demand, types.
- Law of Supply-assumptions and exceptions
- Supply schedule and supply curve
- Determinants of supply, changes and variations in supply
- Supply elasticity-definition, types, determinants
- Methods of measurement of supply

300 Economics of Production and Growth

- Production function-types of production economies
- Diseconomies of scale
- Features of growth
- Growth v/s Development
- Determinants of growth (economic and non-economic)
- Stages of growth
- Growth strategy- steady state and big – push growth strategy; balanced and unbalanced growth

400 Cost Accounting

- Outline of Accounting Procedure
- Basic Relationship in Accounting
- Balance Sheet- types of Asset; Current and Cash Ratio
- Income Statement; Debits and Credits; General format of Journal and Ledger
- Methods of cost accounting
- Accumulation, inventory and cost-of-sales account
- Material cost – Different Methods: current average, fifo, lifo

500 Interests and Investment Costs

- Importance of time value of money- Interest and Interest rate
- Types of Interest – Simple interest (ordinary and exact), Compound interest, Nominal and Effective interest rates, Continuous interest
- Present worth and Discount
- Annuities, Perpetuities and Capitalized costs
- Cash Flow in Chemical Projects

600 Taxes and Insurance

- Concept of taxes and insurance
- Types of Taxes - property tax, excise tax, income tax Capital gain tax, surtax, normal tax
- Insurance types, Legal responsibilities, Self insurance
- Effect of taxes and depreciation on annual income

700 Cost Estimation

- Cash flow to Industrial operation – Tree diagram; Cumulative Cash position
- Factors affecting cost estimation
- Total, fixed, working capital investment
- Breakdown of Fixed capital investment- Direct costs; Indirect costs
- Types of Capital Cost Estimates
- Grass Root plant; Battery limit
- Estimation of equipment cost by scaling (six tenth rule); Components of costs in FCI
- Methods of Cost Estimation
- Estimation of Total Product Cost
- Break even Analysis

800 Profitability, Alternative Investments and Replacements

- Introduction; Profitability Standards
- Mathematical methods for profitability evaluation- Rate of Return on investment method , Discounted cash flow method , Net present worth method, Capitalized Cost method , Pay out period method; Advantages & Disadvantages of Different Profitability Analysis Methods and their comparison
- Alternative investments
- Replacement analysis
- Practical factors affecting investment and replacement decisions

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