Question 4 (25 marks) Oshana Construction has just signed a contract with Tangi Enterprises for the construction of a machine. The management accountant constructed the following network diagram for the project Page 15 of 16 FACULTY OF COMMERCE, MANAGEMENT AND LAW B 48 96 125 A 95 E 128 N$ The duration and variable cost under normal and accelerated circumstances of the various activities are as follows: Activity Estimated time (hours) Estimated variable implementation Cost slope costs $ Normal Accelerated Normal (NS) Accelerated (NS) A-B 96 64 224 000 308 000 2 000 A-C 95 90 120 000 135 000 ? B-C 0 0 0 0 0 B-D 48 32 110 000 126 000 1 000 C-E 128 ? ? 172 000 193 600 1 200 D-E 125 85 133 000 193 000 1 500 779 000 955 600 The accelerated duration of activity C-E is uncertain. The estimated hours are as follows: Most optimistic time 98 hours Most likely time 107 hours Most pessimistic time 134 hours Fixed costs are absorbed at a rate of N$1 750 per hour and are not regarded as committed fixed costs. Other direct costs for the project amount to N$250 000 Marks Required Sub Total total 4.1 Calculate the cost slope for activity A-C. 2 2 4.2 Calculate the expected duration of the accelerated/crash activity C-E. 3 5 4.3 Calculate the duration of the various routes and determine the critical path. 2 7 Set out the programme to be followed in order to reduce total project time in 4.4 the most cost efficient manner and state the number of hours for completion of 15 22 the project that will ensure minimum total costs. 4.5 Calculate the accelerated/crash cost of the project. 3 25 Total 25 Total assignment 2: 85 marks Page 16 of 16