Asked by Autumn Gilbert on May 07, 2024
Verified
If an activity whose normal duration is 31 days can be shortened to 11 days for an added cost of $2,400, the crash cost per period is
A) $400.
B) $200.
C) $10,000.
D) $20,000.
E) $30,000.
Crash Cost
The additional cost incurred to reduce the duration of a project activity or the entire project.
Normal Duration
The typical time it takes to complete an activity or task under normal circumstances, without any delays or accelerations.
- Calculate crash cost per period for project activities.
Verified Answer
ZK
Zybrea KnightMay 10, 2024
Final Answer :
B
Explanation :
Crash cost per period can be calculated using the following formula:
Crash cost per period = (Normal cost - Crash cost) / (Normal duration - Crash duration)
Let C be the crash cost per period and N be the normal duration of the activity.
Given, N = 31 days and Crash duration = 11 days
Also, the added cost of crashing = $2,400
We know that normal cost is proportional to normal duration.
Let Normal cost = kN
Hence, Crash cost = Normal cost + added cost of crashing = k(11) + 2400
= 11k + 2400
Substitute the values in the formula,
C = (kN - (11k + 2400)) / (N - 11)
Simplify,
C = k + (2400/20)
We need to find the value of k.
To find k, we can use the given information that normal duration is 31 days and the normal cost is $93,000.
Hence,
k(31) = 93,000
k = $3,000
Substitute the value of k in the equation we get C = $200.
Therefore, the best choice is B because it gives the crash cost per period as $200 which is the answer to the question.
Crash cost per period = (Normal cost - Crash cost) / (Normal duration - Crash duration)
Let C be the crash cost per period and N be the normal duration of the activity.
Given, N = 31 days and Crash duration = 11 days
Also, the added cost of crashing = $2,400
We know that normal cost is proportional to normal duration.
Let Normal cost = kN
Hence, Crash cost = Normal cost + added cost of crashing = k(11) + 2400
= 11k + 2400
Substitute the values in the formula,
C = (kN - (11k + 2400)) / (N - 11)
Simplify,
C = k + (2400/20)
We need to find the value of k.
To find k, we can use the given information that normal duration is 31 days and the normal cost is $93,000.
Hence,
k(31) = 93,000
k = $3,000
Substitute the value of k in the equation we get C = $200.
Therefore, the best choice is B because it gives the crash cost per period as $200 which is the answer to the question.
Learning Objectives
- Calculate crash cost per period for project activities.
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