Cost Variance

Correct Answer: The project is $50,000 under budget

The correct answer is that the project is $50,000 under budget. To calculate Cost Variance (CV), we use the formula: CV = Earned Value (EV) - Actual Cost (AC) Given: EV = $750,000 AC = $700,000 CV = $750,000 - $700,000 = $50,000 A positive Cost Variance indicates that the project is under budget. In this case, the project has spent $50,000 less than the value of work completed. The other options are incorrect: - The project is not over budget or behind schedule. A positive CV indicates better than planned performance. - The project is not on budget. Being on budget would mean CV = 0. - The project does not have a negative variance. The variance is positive, indicating favorable cost performance. It's important to note that CV only tells us about cost performance and does not provide information about the schedule performance of the project.

Correct Answer: $4,000

To calculate the Cost Variance (CV) of a project, the formula is Earned Value (EV) minus Actual Cost (AC). Given the data for your project: - Earned Value (EV) is $16,000 - Actual Cost (AC) is $12,000 Applying the formula: - Cost Variance (CV) is EV minus AC - CV is $16,000 minus $12,000 - CV is $4,000 Therefore, the Cost Variance of the project is $4,000.

Correct Answer: $-10,000

In project management, Cost Variance (CV) is a measure of cost performance of a project. It is calculated as Earned Value (EV) minus Actual Cost (AC), or CV = EV - AC. In this case, Earned Value is $110,000 and Actual Cost is $120,000. So, the cost variance is $110,000 - $120,000 which equals to $-10,000. This means the project is over budget. The answer $10,000 is incorrect as it reflects the difference between Planned Value and Earned Value, not the cost variance. The answers $20,000 and $-20,000 are incorrect and not related to any provided data.