Question
Download Solution PDFWhich of the following is NOT a direct cost?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFExplanation:
A project is crashed in order to complete the project in the optimum duration with the minimum corresponding cost.
The total cost to complete a project includes
Direct Cost:
- It is the cost directly involved with the completion of the project.
- It includes the Raw material consumed during production, Hire charges for tools and equipment, Wages to laborer etc.
Indirect Cost:
- It is the cost not directly involved but it is necessary for the safe and timely completion of the project.
Total cost curve
- Therefore when the project is crashed the direct cost will increase and the indirect cos will decrease.
- During crashing of program for a project Direct costs increase, and indirect costs decrease.
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