The correct answer is: A. Decreasing the direct cost and increasing indirect cost
The direct cost is the cost that is directly related to the production of a product or service. The indirect cost is the cost that is not directly related to the production of a product or service.
When the project time is reduced, the direct cost will decrease because the resources will be used more efficiently. The indirect cost will increase because the project will need to be completed more quickly, which will require additional resources.
For example, if a project is scheduled to take 10 months and the direct cost is $100,000, then the indirect cost would be $10,000 per month. If the project is then reduced to 8 months, the direct cost would decrease to $80,000, but the indirect cost would increase to $12,500 per month.
Here is a brief explanation of each option:
- Option A: Decreasing the direct cost and increasing indirect cost. This is the correct answer. When the project time is reduced, the direct cost will decrease because the resources will be used more efficiently. The indirect cost will increase because the project will need to be completed more quickly, which will require additional resources.
- Option B: Increasing the direct cost and decreasing the indirect cost. This is not the correct answer. The direct cost will decrease when the project time is reduced, not increase.
- Option C: Increasing the direct cost and indirect cost both. This is not the correct answer. The direct cost will decrease when the project time is reduced, but the indirect cost will increase.
- Option D: Decreasing the direct cost and indirect cost both. This is not the correct answer. The direct cost will decrease when the project time is reduced, but the indirect cost will increase.