PK0-005 Project Life Cycle Practice Question
A project manager is calculating the cost performance index (CPI) for a project. The earned value (EV) is $50,000 and the actual cost (AC) is $60,000. What does the CPI indicate? (Select TWO correct statements.)
⚠ Common exam trap
PK0-005 often tests the confusion between cost and schedule performance indices, or misinterpreting the CPI ratio as a direct dollar amount rather than a relative efficiency measure.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The project is over budget.
The CPI is calculated as EV / AC = $50,000 / $60,000 = 0.83, which means the project is earning only $0.83 of value for every $1 spent, so option D is correct. Because the CPI is less than 1.0, the project is spending more than the value it is earning, which indicates it is over budget, making option A correct. Options B and C are incorrect because a CPI below 1.0 never indicates under budget or a favorable $1.20 return per dollar. Option E is incorrect because CPI measures cost efficiency, not schedule performance, which would be assessed using the schedule performance index (SPI).
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
The project is over budget.
Why this is correct
CPI is EV divided by AC, giving 50,000/60,000 = 0.83. Any value below 1.0 means earned value trails actual cost, so the project has spent more than the work delivered is worth — over budget.
- ✗
The project is under budget.
Why it's wrong here
A CPI of 0.83 ($50,000 ÷ $60,000) means each dollar spent returns only 83 cents of earned value, so the project is over budget. Under budget would require CPI above 1.0, where EV exceeds AC — the tempting but inverted reading of the ratio.
- ✗
The project is getting $1.20 worth of work for every $1 spent.
Why it's wrong here
CPI is EV divided by AC, giving 50,000/60,000 = 0.83, meaning only $0.83 of value per dollar spent, so the $1.20 figure inverts the ratio. It is tempting because dividing AC by EV yields 1.20, and that calculation would be correct if the question asked for the inverse cost ratio.
- ✓
The project is getting $0.83 worth of work for every $1 spent.
Why this is correct
With EV of $50,000 against $60,000 AC, CPI equals 0.83, meaning each dollar spent returns only $0.83 of earned value. This satisfies the stem's cost-efficiency calculation, directly quantifying the project's overspend as receiving less work per unit of currency than planned.
- ✗
The project is on schedule.
Why it's wrong here
CPI measures cost efficiency only; schedule status comes from the schedule performance index (SPI), which compares EV with planned value. It is tempting because CPI and SPI are both earned-value indices reported together, and CPI would indicate schedule health only if the question had supplied planned value instead of actual cost.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official CompTIA exam blueprint
This PK0-005 practice question is part of Courseiva's free CompTIA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PK0-005 exam.