PGMP · Question #292
Your program has a budget at completion of $1,550,000 and is expected to last one year. Currently your program is 45 percent complete and has spent $725,000. According to the program schedule you…
The correct answer is A. -$27,500. This question tests earned value management by requiring calculation of cost variance (CV = EV - AC) using actual percent complete rather than planned percent complete.
Question
Your program has a budget at completion of $1,550,000 and is expected to last one year. Currently your program is 45 percent complete and has spent $725,000. According to the program schedule you are actually to be fifty percent complete at this, but due to some vendor delays your program is running just a bit late. Management is concerned that your program will not be able to recoup the costs of the expenses. They've asked you to determine the cost variance for the program. What is the cost variance based on this information?
Options
- A-$27,500
- B-$77,500
- C-$61,111
- D.90
How the community answered
(66 responses)- A74% (49)
- B14% (9)
- C5% (3)
- D8% (5)
Why each option
This question tests earned value management by requiring calculation of cost variance (CV = EV - AC) using actual percent complete rather than planned percent complete.
Earned Value (EV) = 45% x $1,550,000 = $697,500; Cost Variance (CV) = EV - AC = $697,500 - $725,000 = -$27,500, indicating the program has spent $27,500 more than the value of work performed.
-$77,500 is the Schedule Variance (SV = EV - PV), calculated as $697,500 - $775,000, which measures schedule deviation, not cost deviation.
-$61,111 results from confusing CV with the Variance at Completion (VAC), derived by projecting the EAC ($1,611,111) minus BAC, which is a different EVM metric.
0.90 is approximately the Schedule Performance Index (SPI = EV/PV = $697,500/$775,000), an efficiency ratio rather than a cost variance dollar amount.
Concept tested: Earned value management - cost variance calculation
Source: https://www.pmi.org/learning/library/earned-value-management-systems-analysis-8045
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