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A Project Manager Ascertained That Five Different Resources Are Needed

question 68

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A project manager ascertained that five different resources are needed to complete a project that has been estimated to last 37 days.Just to be on the safe side,the project manager told the client that the project would definitely be delivered in 40 days and 40 nights and arranged to rent the resources for that period of time.The project manager goes to the local rental center at the start of day 1 of the project,signs a 40-day lease agreement for all five resources,and brings them to the site to begin the project.Analyze the Gantt chart and resource list (activity durations are in parenthesis)and determine how much money is being wasted with this rental plan.If each resource could be rented for just the time it takes to complete each activity,what would the charge to the project be?
$A project manager ascertained that five different resources are needed to complete a project that has been estimated to last 37 days.Just to be on the safe side,the project manager told the client that the project would definitely be delivered in 40 days and 40 nights and arranged to rent the resources for that period of time.The project manager goes to the local rental center at the start of day 1 of the project,signs a 40-day lease agreement for all five resources,and brings them to the site to begin the project.Analyze the Gantt chart and resource list (activity durations are in parenthesis)and determine how much money is being wasted with this rental plan.If each resource could be rented for just the time it takes to complete each activity,what would the charge to the project be? \begin{array} { | l | l | } \hline \text { Resource } & \\ \text { Nurnber } & \text { Daily Rate } \\ \hline 1 & \$ 1,000 \\ \hline 2 & \$ 1,200 \\ \hline 3 & \$ 500 \\ \hline 4 & \$ 750 \\ \hline 5 & \$ 800 \\ \hline \end{array} \begin{array} { | l | l | l | l | } \hline \text { Activity } & \text { Length } & \text { Activity } & \text { Length } \\ \hline \mathrm { H } & 3 & \mathrm {S } & 3 \\ \hline \mathrm { M } & 9 & \mathrm {~J} & 1 \\ \hline \mathrm { P } & 6 & \mathrm {~W} & 4 \\ \hline \mathrm {B } & 7 &\mathrm { T }& 4 \\ \hline \mathrm { R } & 9 & \mathrm { G } & 4 \\ \hline \mathrm { F } & 5 &\mathrm {K } & 10 \\ \hline \end{array}$ $\begin{array} { | l | l | } \hline \text { Resource } & \\ \text { Nurnber } & \text { Daily Rate } \\\hline 1 & \$ 1,000 \\\hline 2 & \$ 1,200 \\\hline 3 & \$ 500 \\\hline 4 & \$ 750 \\\hline 5 & \$ 800 \\\hline\end{array}$ $\begin{array} { | l | l | l | l | } \hline \text { Activity } & \text { Length } & \text { Activity } & \text { Length } \\\hline \mathrm { H } & 3 & \mathrm {S } & 3 \\\hline \mathrm { M } & 9 & \mathrm {~J} & 1 \\\hline \mathrm { P } & 6 & \mathrm {~W} & 4 \\\hline \mathrm {B } & 7 &\mathrm { T }& 4 \\\hline \mathrm { R } & 9 & \mathrm { G } & 4 \\\hline \mathrm { F } & 5 &\mathrm {K } & 10 \\\hline\end{array}$

Definitions:

Replacement Cost

The cost to replace an item or asset at current prices, disregarding its original purchase price or accumulated depreciation.

Operating Margin

A profitability measure calculated as operating income divided by revenue, showing the percentage of profits generated from operations before taxes and interest.

Variable Costing

An accounting method that only includes variable production costs (costs that change with the level of output) in the cost of goods sold and treats fixed costs as period costs.

Absorption Costing

A pricing technique that integrates all expenses related to production, such as direct materials, direct labor, along with both variable and fixed overhead costs, into a product's cost.