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CMA Intermediate · Operations Management and Strategic Management · Project Management, Monitoring and Control

An activity has a normal time of 10 days at a normal cost of ₹40,000 and a crash time of 6 days at a crash cost of ₹52,000. Assuming linear cost behaviour, what is its crash cost slope per day?

The crash cost slope is ₹3,000 per day. The extra cost of crashing is 52,000 minus 40,000, which is ₹12,000, and this buys a reduction of 4 days (10 minus 6), so 12,000 divided by 4 gives ₹3,000 per day.

  1. A₹2,000
  2. B₹3,000Correct
  3. C₹4,000
  4. D₹1,200

Explanation

Crash slope = (Crash cost − Normal cost) / (Normal time − Crash time) = (52,000 − 40,000) / (10 − 6) = 12,000 / 4 = ₹3,000 per day. Using the crash time of 6 days as the divisor gives ₹2,000, which is wrong because the time saved is 4 days, not 6.

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