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Sample FE Exam Problems
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How to use this section: This section includes questions and problems like those on a typical FE exam. For organization purposes only, they are presented in chapter order of the text Engineering Economy, 6th edition, by Blank and Tarquin.

It is recommended that you read through each question carefully.

1
A manufacturing process has fixed costs of $20,000 per year with variable costs of $15 per unit. If the company sells each unit for $20, the number of units that must be sold each year in order to reach breakdown is nearest to:
A)1,000 units
B)2,000 units
C)3,000 units
D)4,000 units
2
The initial cost of machinery for producing a certain item is $50,000. The machinery will have a five-year life with no salvage value. The manufacturing process has a fixed cost of $5,000 per year and a variable cost of $16 per unit. At an interest rate of 8% per year, the number of units that must be sold at $20 per unit for breakdown is nearest to:
A)2,450
B)3,690
C)4,380
D)5,260
3
Figure 1 below is a graph of the cost of producing a certain part by two different methods, A and B.

Click here to view Figure 1 (5.0K)

The fixed cost of method A is closest to:

A)$600 per year
B)$30,000 per year
C)$70,000 per year
D)$100,000 per year
4
Fixed costs for a small import company are $500,000 per year. Its primary imported item sells at a revenue of $30 per unit and has variable costs of $1.20 per unit. The number of units the company must sell each year to breakeven is closest to:
A)11,500
B)14,400
C)17,400
D)21,600
5
A toy manufacturing company has a capacity of 300,000 units annually. The fixed cost of the production line is $200,000 per year with a variable cost of $4 per unit and revenues of $7 per unit. The percent of capacity that must be utilized for the company to breakdown is closest to:
A)22
B)31
C)39
D)46
6
The total cost of producing a product is represented by the equation:

0.003Q2 + 4Q + 3

where Q is the number of units per year. If revenue is represented by 20Q, the maximum profit will occur at an annual production rate closest to:

A)2,667
B)4,000
C)5,333
D)6,667
7
A specified part can be obtained by either of two methods. Method A will have fixed costs of $40,000 per year and a variable cost of $20 per unit. Method B will have fixed costs of $60,000 per year and a variable cost of $15 per unit. The number of units that must be produced each year for the two methods to be equally attractive is closest to:
A)2,000
B)4,000
C)6,000
D)8,000
8
Two coatings are under consideration for a liquid chemical storage tank. A tank coating identified as Material A will have a first cost of $50,000 and a 10 year life, if repaired at the end of year five. Material B will cost $20,000 initially and $5,000 per year through its five year life. At an interest rate of 10% per year, the amount that could be spent for repairing Material A that would make the two breakeven is closest to:
A)$12,500
B)$16,400
C)$21,200
D)$25,600
9
Fixed costs for manufacturing a certain product are $25,000 per year. Variable costs are $5 per unit. The product can be purchased from another manufacturer for a flat rate of $10 per unit. The number of units that must be used each year in order for the manufacture and purchase alternatives to breakeven is closest to:
A)2,000 units
B)3,000 units
C)4,000 units
D)5,000 units
10
A used bulldozer with a remaining life of 5 years and $10,000 salvage value can be purchased for $40,000. The annual maintenance cost is expected to $20,000 per year. In addition, operating costs are expected to be $25 per hour. Alternatively, a bulldozer can be rented for $150 per hour.

At an interest rate of 10% per year, the minimum number of hours per year the bulldozer must be utilized to justify its purchase is closest to:

A)230 hours
B)310 hours
C)460 hours
D)730 hours





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