Two Critical Path Activities Are Candidates for Crashing on a CPM

question 96

Multiple Choice

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

• A) B; $2,000
• B) B; $8,000
• C) C; $1,000
• D) C; $2,000
• E) C; $6,000

---

Definitions:

Break-even Sales

refers to the amount of revenue needed to cover all fixed and variable costs, at which point a business neither makes a profit nor incurs a loss.

Absorption Costing

A technique in accounting that rolls all manufacturing expenses including direct material costs, direct labor, and every overhead, regardless if fixed or variable, into the overall cost of a product.

Unit Product Cost

The overall expense involved in creating one unit of a product, encompassing direct materials, direct labor, and distributed overhead costs.

Absorption Costing

An accounting method that includes all manufacturing costs (both variable and fixed) in the cost of a product.