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Chapter 18 - Answer - MANAGEMENT ACCOUNTING Solutions...

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MANAGEMENT ACCOUNTING - Solutions Manual CHAPTER 18 APPLICATION OF QUANTITATIVE TECHNIQUES IN PLANNING, CONTROL AND DECISION MAKING - II I. Questions 1. PERT is superior to Gantt Charts in complex projects because: a. PERT charts are flexible and can reflect slippage or changes in plans, but Gantt charts simply plot a bar chart against a calendar scale. b. PERT charts reflect interdependencies among activities; Gantt charts do not. c. PERT charts reflect uncertainties or tolerances in the time estimates for various activities; Gantt charts do not. 2. The use of PERT provides a structured foundation for planning complex projects in sufficient detail to facilitate effective control. A workable sequence of events that comprise the project are first identified. Each key event should represent a task; then the interdependent relationships between the events are structured. After the network of events is constructed, cost and time parameters are established for each package. Staffing plans are reviewed and analyzed. The “critical path” computation identifies sequence of key events with total time equal to the time allotted for the project’s completion. Jobs which are not on the critical path can be slowed down and the slack resources available on these activities reallocated to activities on the critical path. Use of PERT permits sufficient scheduling of effort by functional areas and by geographic location. It also allows for restructuring scheduling efforts and redeployment of workers as necessary to compensate for delays or bottlenecks. The probability of completing this complex project on time and within the allotted budget is increased. 3. Time slippage in noncritical activities may not warrant extensive managerial analysis because of available slack, but activity cost usually increases with time and should be monitored. 18-1
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Chapter 18 Application of Quantitative Techniques in Planning, Control and Decision Making - II 4. The critical path is the network path with the longest cumulative expected activity time. It is critical because a slowdown along this path delays the entire project.
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