Two Critical Path Activities Are Candidates for Crashing on a CPM

question 57

Multiple Choice

Two critical path activities are candidates for crashing on a CPM network. Activity details are in the table below. To cut two days from the project's duration, activity ________ should be crashed, adding ________ to the total project cost. $$\begin{array} { | c | c | c | c | c | } \hline \text { Activity } & \text { Normal Time } & \text { Normal Cost } & \text { Crash Time } & \text { Crash Cost } \\\hline \mathrm { D } & 5 \text { days } & \$ 6,000 & 3 \text { days } & \$ 8,000 \\\hline \mathrm { E } & 8 \text { days } & \$ 4,000 & 4 \text { days } & \$ 6,000 \\\hline\end{array}$$

• A) D; $2,000
• B) D; $1,000
• C) E; $500
• D) E; $1,000
• E) E; $6,000

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Definitions:

Projected Inventory Balance

The estimated quantity of goods a company expects to have on hand over a future period considering expected sales and production.

Activity-based Budgeting

A budgeting approach where budgets are based on the activities and resources necessary to achieve an organization's goals.

Capital Expenditures Budget

A plan for projected expenditures on physical assets that will be used for more than one year, aimed at maintaining or improving the company's operations.

Continuous Budgeting

A process of constantly updating a budget for a set period in the future to reflect changes as they happen.