Free PMI Project Management Professional (PMP) Practice Question
A project manager is analyzing the financial performance of their project. The Earned Value (EV) is $250,000, and the Actual Cost (AC) is $275,000. What is the Cost Variance (CV) for this project?
The correct answer is -$25,000. Cost Variance (CV) is calculated using the formula CV = EV - AC. In this case, CV = $250,000 - $275,000 = -$25,000. A negative CV indicates that the project is over budget. The project has spent $25,000 more than the value of work completed. This information is valuable for the project manager to take corrective actions and bring the project back on track financially. It's important to note that while $25,000 is the correct numerical value, it's expressed as a negative number to accurately represent the overspend situation.
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What is Earned Value (EV) in project management?
How is Actual Cost (AC) determined in a project?
What does a negative Cost Variance (CV) indicate?
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PMI Project Management Professional (PMP) /
Process
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