Cost Profit Management , Exams of Finance

Sample questions for the subject of Cost management accounting

Typology: Exams

2017/2018

Uploaded on 02/08/2018

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CPM (Deterministic) Problem:
A company is bringing a new product on line to be manufactured in their
current facility in some existing space. The owners have identified 11
activities and their precedence relationships. Develop an AON for the project.
Activity Description
Immediate
Predecessor
Duration
(weeks)
A Develop product specifications None 4
B Design manufacturing process A 6
C Source & purchase materials A 3
D Source & purchase tooling & equipment B 6
E Receive & install tooling & equipment D 14
F Receive materials C 5
G Pilot production run E & F 2
H Evaluate product design G 2
I Evaluate process performance G 3
J Write documentation report H & I 4
K Transition to manufacturing J 2
© WILEY 2010
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CPM (Deterministic) Problem: A company is bringing a new product on line to be manufactured in their current facility in some existing space. The owners have identified 11 activities and their precedence relationships. Develop an AON for the project.

Activity Description

Immediate

Predecessor

Duration

(weeks)

A Develop product specifications None 4

B Design manufacturing process A 6

C Source & purchase materials A 3

D Source & purchase tooling & equipment B 6

E Receive & install tooling & equipment D 14

F Receive materials C 5

G Pilot production run E & F 2

H Evaluate product design G 2

I Evaluate process performance G 3

J Write documentation report H & I 4

K Transition to manufacturing J 2

© WILEY 2010

CPM (Activity on Node) Diagram © WILEY 2010

Path Completion Times The longest path (ABDEGIJK) limits the project’s duration (project cannot finish in less time than its longest path) ABDEGIJK is the project’s critical path Paths Path duration ABDEGHJK 40 ABDEGIJK 41 ACFGHJK 22 ACFGIJK 23 © WILEY 2010

PERT: Using Probabilistic Time Estimates for the previous problem

Activity Description

Optimistic

time

Most likely

time

Pessimistic

time

A Develop product specifications 2 4 6

B Design manufacturing process 3 7 10

C Source & purchase materials 2 3 5

D Source & purchase tooling & equipment 4 7 9

E Receive & install tooling & equipment 12 16 20

F Receive materials 2 5 8

G Pilot production run 2 2 2

H Evaluate product design 2 3 4

I Evaluate process performance 2 3 5

J Write documentation report 2 4 6

K Transition to manufacturing 2 2 2

Calculating Expected Task Times Activity Optimistic time Most likely time Pessimistic time Expected time A 2 4 6 4 B 3 7 10 6. C 2 3 5 3. D 4 7 9 6. E 12 16 20 16 F 2 5 8 5 G 2 2 2 2 H 2 3 4 3 I 2 3 5 3. J 2 4 6 4 K 2 2 2 2   6 optimistic 4 most likely pessimistic Expected time   

Network Diagram with

Expected Activity Times

Project Activity Variances Activity Optimistic Most Likely Pessimisti c Variance A 2 4 6 0. B 3 7 10 1. C 2 3 5 0. D 4 7 9 0. E 12 16 20 1. F 2 5 8 1. G 2 2 2 0. H 2 3 4 0. I 2 3 5 0. J 2 4 6 0. K 2 © WILEY 2010 2 2 0.

Critical Activity Variances Activity Optimistic Most Likely Pessimisti c Variance A 2 4 6 0. B 3 7 10 1. C 2 3 5 0. D 4 7 9 0. E 12 16 20 1. F 2 5 8 1. G 2 2 2 0. H 2 3 4 0. I 2 3 5 0. J 2 4 6 0. K 2 2 2 0. Critical activities highlighted Sum over critical = 4.