In the time-cost analysis, crash cost = 15000, normal cost = 10000, crash time = 5 and normal time = 10. Then the cost slope is ________
- A1000Correct
- B1200
- C1500
- D500
Solution
Concept
Cost slope calculation in project crashing
Formula
Cost Slope = (Crash Cost - Normal Cost) / (Normal Time - Crash Time)
Step-by-step solution
1. Extract project crashing parameters: - Normal Cost = 10,000, Crash Cost = 15,000 - Normal Time = 10, Crash Time = 5 2. Calculate increase in direct cost: 15,000 - 10,000 = 5,000. 3. Calculate time saved: 10 - 5 = 5. 4. Calculate Cost Slope = 5,000 / 5 = 1,000. 5. Therefore, option A (1000) is correct. Answer: A
Explanation
Cost slope is the direct cost increase per unit reduction in activity duration. It is calculated as: Cost Slope = (Crash Cost - Normal Cost) / (Normal Time - Crash Time) = (15000 - 10000) / (10 - 5) = 5000 / 5 = 1000 per day.
Why the other options are wrong
B) 1200 is an incorrect calculation result. C) 1500 is an incorrect calculation result. D) 500 corresponds to dividing 5,000 by 10 instead of by the time reduction (5).
Shortcut
Cost Slope = Δ Cost / Δ Time = (15000 - 10000) / (10 - 5) = 1000.
Common mistake
Inverting the denominator or subtracting crash time from normal cost.
Correct answer: A) 1000