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  3. CIA-III

Financial CIA-III Exam (page: 22)
Financial The Certified Internal Auditor Part 3
Updated on: 16-Feb-2026

Viewing Page 22 of 312
CIA-III PDF 1554 Questions

To keep costs at a minimum and decrease the completion time by 1-1/2 days, Networks, Inc.
should crash activity(ies):

  1. AD and AB
  2. DE
  3. AD
  4. AB and CE

Answer(s): A

Explanation:

The critical (longest) path is A-D-E, which has an expected time of 13 days (5.5 + 7.5). However, to decrease the project's completion time by 1.5 days, paths A-B-C-E (4.5 + 1.0 + 6.5 = 12 days) and A-B-D-E (4.5 + .5 + 7.5= 12.5 days) as well as A-D-E must also be shortened. Hence, A-D-E must be reduced by 1.5 days. A-B-C-E by .5 day, and A-B-D-E by 1.0 day. The only way to decrease A-D-E by 1.5 days is to crash activity AD (5.5 expected time - 4.0 crash time = 1.5 days). Crashing DE results in a 1.0-day saving (7.5-6.5) only. Crashing AB is the efficient way to reduce both A-B-C-E and A-B-D-E by the desired amount of time because it is part of both paths. The incremental cost of crashing AB is US $1,000 (US $4,000 crash cost - US $3,000 normal cost) to shorten the completion time by 1.0 day (4.5 - 3.5). The alternatives for decreasing both A-B-C-E and A-B-D-E are more costly.



When making a cost-time trade-off in CPM analysis, the first activity that should be crashed is the activity:

  1. With the largest amount of slack.
  2. With the lowest unit crash cost.
  3. On the critical path with the maximum possible time reduction.
  4. On the critical path with the lowest unit crash cost.

Answer(s): D

Explanation:

When making a cost-time trade-off, the first activity to be crashed (have its completion time accelerated) is one on the critical path. To select an activity on another path would not reduce the total time of completion. The initial activity chosen should be the one with the completion time that can be accelerated at the lowest possible cost per unit of time saved.



In PERT, slack is the:

  1. Uncertainty associated with time estimates.
  2. Difference between the latest starting time and earliest finishing time.
  3. Path that has the largest amount of time associated with it.
  4. Number of days an activity can be delayed without forcing a delay for the entire project.

Answer(s): D

Explanation:

Slack is the amount of time that commencement of an activity can be delayed without forcing a delay of the entire project.



The network below describes the interrelationships of several activities necessary to complete a project. The arrows represent the activities. The numbers between the arrows indicate the number of months to complete each activity.


The shortest time to complete the project is:

  1. 5 months.
  2. 6 months.
  3. 8 months.
  4. 14 months.

Answer(s): C

Explanation:

The critical (longest) path through the network from node (A) to node (F) is path A-C-D-F. All other paths are shorter than path A-C-D-F, so the activities along those paths can be completed before the activities along path A-C-D-F. Thus, the shortest time to complete the project is 8 months (3 + 3 + 2).



A shortest-route algorithm is used in network models to:

  1. Identify bottlenecks in a network and hence identify the longest path.
  2. Minimize total travel time from one site to each of the other sites in a transportation system.
  3. Maximize throughput in networks with distinct entry (source node) and exit (sink node) points.
  4. Identify the set of connecting branches having the shortest combined length.

Answer(s): B

Explanation:

Network models are used to solve managerial problems pertaining to project scheduling, information systems design, and transportation systems design. Networks consisting of nodes and arcs may be created to represent in graphic form problems related to transportation, assignment, and transshipment. The shortest-route, minimal spanning tree, and maximal flow problems are other applications of network models. A shortest-route algorithm minimizes total travel time from one site to each of the other sites in a transportation system.



Viewing Page 22 of 312



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