Free PMI Project Management Professional (PMP) Practice Question

The Cost Performance Index (CPI) is calculated using the formula CPI = EV / AC. Given that the Earned Value (EV) is $300,000 and the Actual Cost (AC) is $350,000, the CPI would be $300,000 / $350,000, which equals approximately 0.86. This means that for every dollar spent, only $0.86 of value is earned, indicating a cost efficiency below 1, which signals that the project is over budget.