If activity E is reduced by 1 week and activity A is reduced by 2 weeks, what is the new total project cost?
A) $69,000
B) $34,000
C) $55,000
D) $76,000

Question

Quizplus · Accepted Answer

We need to assume that reducing activity E by 1 week and activity A by 2 weeks does not affect any other activity's duration or cost. Thus, the critical path is still A-B-D-F-G. 
To calculate the new project cost, we will use the equation: 
New Cost = Old Cost + (Old Duration - New Duration) x Cost per week 
For activity E, Old Duration = 5 weeks, New Duration = 4 weeks, Cost per week = $2,000 
Thus, reducing activity E by 1 week will save 1 x $2,000 = $2,000 
For activity A, Old Duration = 6 weeks, New Duration = 4 weeks, Cost per week = $5,000 
Thus, reducing activity A by 2 weeks will save 2 x $5,000 = $10,000 
Now, we can calculate the new project cost: 
New Cost = $70,000 + ($2,000 + $10,000) = $82,000 
Thus, reducing activity E by 1 week and activity A by 2 weeks will increase the project's cost from $70,000 to $82,000.

If Activity E Is Reduced by 1 Week and Activity