A. Cost & installation of plant and machinery
B. Cost of land
C. Sales revenue
D. Technical know - how cost
E. Survey of market
Choose the correct answer from the options given below :
Identifying Project Cost Components
To determine the correct components of the project cost, we need to analyze each item listed:
- A. Cost & installation of plant and machinery: This represents a direct capital expenditure and is a fundamental part of the project cost.
- B. Cost of land: Acquiring land is a necessary capital investment if required for the project, hence it is part of the project cost.
- C. Sales revenue: This is income generated from the project's activities, not an expense or cost incurred for setting up the project. Therefore, it is excluded.
- D. Technical know-how cost: This includes costs for acquiring technology, licenses, or specialized knowledge essential for the project, making it a project cost.
- E. Survey of market: Market surveys are typically considered preliminary or feasibility study costs, often preceding the final project cost determination. Based on standard project costing principles and the implied scope from the options, this is usually excluded from the core project capital cost.
Conclusion on Project Costs
Based on the analysis, the items that constitute the cost of the project are:
- Cost & installation of plant and machinery (A)
- Cost of land (B)
- Technical know-how cost (D)
Therefore, the correct combination is A, B, and D.
Important Questions from Project Planning
Pick up the correct statement from the following.
Miscellaneous expenses such as office expenses, stationery, postal expenses, etc., falls under _______.
Which of the following phases does NOT come under the project management stages?
The maximum amount of time that an activity can be delayed without extending the completion time of the overall project is called:
A company has 5,000 obsolete toys in inventory at a production cost of $10 each. If the toys were remade for $ 3 each, they could sell for $ 5 each. If the toys are thrown away, they can be sold for $ 2.5 each. Which alternative is more desirable (rework or scrap) and what is the total benefit amount of this alternative?
