hardMultiple Choice
PK0-005 Practice Question: Refer to the exhibit
Exhibit
Project Status Report - Monthly Budget: Planned Value (PV): $120,000 Actual Cost (AC): $130,000 Earned Value (EV): $115,000
Refer to the exhibit. Based on the project status report, what is the cost variance (CV) and what does it indicate?
⚠ Common exam trap
The trap here is that candidates may misread the exhibit or incorrectly compute CV by subtracting EV from AC (AC - EV) instead of EV - AC, leading to a positive value that falsely suggests under budget performance.
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
✓
CV = -$15,000; over budget
The cost variance (CV) is calculated as earned value (EV) minus actual cost (AC). From the exhibit, EV = $25,000 and AC = $40,000, so CV = $25,000 - $40,000 = -$15,000. A negative CV indicates the project is over budget, meaning costs have exceeded the value of work performed.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
CV = -$5,000; over budget
Why it's wrong here
The exhibit's earned value figures give a different CV, so this value misreads the data; a negative CV does indicate over budget, but the arithmetic is wrong. It is tempting because the sign and interpretation are right, and this answer would be correct had actual cost exceeded earned value by $5,000.
- ✓
CV = -$15,000; over budget
Why this is correct
Cost variance is earned value minus actual cost; a negative result of $15,000 means costs exceed the budgeted value of work performed, so the project is over budget. This directly satisfies the stem's request for both the CV figure and its interpretation.
- ✗
CV = -$10,000; over budget
Why it's wrong here
The exhibit's earned value figures yield a different CV, so this figure is miscalculated; the over-budget interpretation is right but the magnitude is wrong. It is tempting because it pairs the correct direction with a plausible number, and would be correct if AC minus EV genuinely equalled $10,000.
- ✗
CV = $5,000; under budget
Why it's wrong here
The exhibit shows actual cost exceeding earned value, so CV is negative and the project is over budget, not under. It is tempting because a positive CV does mean under budget, and this would be correct had earned value surpassed actual cost by $5,000.
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