A small project is composed of the following activities whose time estimates are given below:

Activity Optimistic Most Likely Pessimistic Ta Variance

Description (Weeks) (Weeks) (Weeks)
1-2 1 1 7 2 1
1-3 1 4 7 4 1
1-4 2 2 8 3 1
2-5 1 1 1 1 0
3-5 2 5 14 6 4
4-6 2 5 8 5 1
5-6 3 6 15 7 4

Ta= Time expected

Tp= Time pessimistic
To= Time optimistic
Tm= Time mostly

Ta= To+4(Tm) +Tp

6
2
Variance= Tp- To
6

Ta1=1+4(1) + 7/6= 2
Ta2=1+4(4) +7/6= 4
Ta3=2+4(2) +8/6= 3
Ta4=1+4(1) +1/6= 1
Ta5=2+4(5) +14/6= 6
Ta6=2+4(5) +8/6= 5
Ta7=3+4(6) +15/6= 7

Variance

Va1= (7-1/6)2= 1
Va2= (7-1/6)2= 1
Va3= (8-2/6)2= 1
Va4= (1-1/6)2= 0
Va5= (14-2/6)2= 4
Va6= (8-2/6)2= 1
Va7= (15-3/6)2= 4

Write a brief note on the three estimates for three activities A, B and C are follows:.

Optimistic Most likely Pessimistic Ta Variance

A 11 13 15 35 0.44
B 7 9 13 18.67 1
C 6 11 13 10.5 1.36

Optimistic: It is the shortest time taken to complete the activity. It means that if everything goes
well then there is more chance of completing the activity within the time.

Most likely: It is the normal time taken to complete an activity were frequently repeated under
the conditions.

Pessimistic: It is the longest time that an activity would take to complete; it is the worst time
estimate that an activity would take if unexpected problems are faced.

Time expected
Ta1= 11+4(13) +15/6= 35
Ta2= 7+4(9) +13/6= 18.67
Ta3= 6+4(11) +13/6= 10.5

Variance
Va1= (15-11/6)2= 0.44
Va2= (13-7/6)2= 1
Va3= (13-6/6)2= 1.36
A machine is purchased for Rs. 40,000. The estimated life of the machine is 15 years and scrap
value is Rs. 15,000. If the rate of depreciation fund is charged at 5%. Calculate the rate of
depreciation by sinking fund method.

Rate - Rate of interest (in percentage)

Cost - Cost of the machine (in rupees)

Scrap rate - selling price (in rupees)

Yearly Depreciation = {Rate [Cost - Scrap]} / {[1 + Rate] (years)}

Yearly Depreciation = {5[40000-15000]}/ {[1+5] (15)}

= 1, 25,000/90
= 1388.88
At a sales volume of Rs. 2, 10,000 the variable cost is Rs. 70, 000, fixed costs are 1, 00,000 and
the profit is Rs. 40, 000. What is the break even point?

Break even point

Fixed costs
= 1-Variable costs
Sales

1, 00,000
= 1-70,000
1, 10,000

= 1, 00,000 * 1, 10,000
1-70, 000

= 1, 57,145.10