CAPM Cost Variance (CV) Practice Question
A project has a cost baseline of $100,000. At the end of month 2, the planned value is $30,000, and the actual cost is $40,000. If the earned value is $25,000, what is the cost variance?
⚠ Common exam trap
CAPM often tests the sign convention and formula confusion — candidates mix up CV = EV − AC with SV = EV − PV, or forget that a negative CV means over budget, leading them to pick the positive $15,000 or the wrong magnitude.
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
✓
-$15,000
Cost Variance (CV) is calculated as Earned Value (EV) minus Actual Cost (AC). Here EV = $25,000 and AC = $40,000, so CV = 25,000 − 40,000 = −$15,000. A negative CV indicates the project is over budget at this point in time.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$15,000
Why it's wrong here
This is the magnitude of the negative variance, but cost variance is EV minus AC, giving −$15,000; the sign matters because the project is over budget. It is tempting because $15,000 is the correct absolute overspend. A positive $15,000 would be right only if earned value exceeded actual cost.
- ✗
-$10,000
Why it's wrong here
Cost variance is earned value minus actual cost, giving $25,000 − $40,000 = −$25,000, not −$10,000. The value −$10,000 is tempting because it is the variance between planned value and actual cost, which ignores earned value entirely.
- ✓
-$15,000
Why this is correct
Cost variance equals earned value minus actual cost: $25,000 − $40,000 = −$15,000. The negative result signals the project is over budget by $15,000 at month 2. Planned value is irrelevant to this calculation, so the $30,000 figure is excluded.
- ✗
$10,000
Why it's wrong here
Cost variance is EV minus AC ($25,000 − $40,000 = −$15,000), so a positive $10,000 misreads the sign and arithmetic. It is tempting as the difference between planned value and actual cost, but that figure is not cost variance. Positive $10,000 would be correct only if earned value exceeded actual cost.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PMI exam blueprint
This CAPM practice question is part of Courseiva's free PMI 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 CAPM exam.