CAPM Predictive Plan-Based Methodologies Practice Question
A project manager is reviewing the project's cost performance. The actual cost (AC) is $50,000, the earned value (EV) is $45,000, and the planned value (PV) is $60,000. What is the cost variance (CV)?
⚠ Common exam trap
A common mix-up: candidates confuse cost variance (CV = EV - AC) with schedule variance (SV = EV - PV) or incorrectly subtracting AC from EV, leading candidates to pick $5,000 or -$15,000.
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
✓
-$5,000
Cost variance (CV) is calculated as EV minus AC. Here, EV = $45,000 and AC = $50,000, so CV = $45,000 - $50,000 = -$5,000. A negative CV indicates the project is over budget, which matches option C.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$5,000
Why it's wrong here
Positive $5,000 would indicate under budget, but EV < AC.
- ✗
-$15,000
Why it's wrong here
This would be PV - AC, not CV.
- ✓
-$5,000
Why this is correct
CV = EV - AC = -$5,000.
- ✗
$10,000
Why it's wrong here
This is the schedule variance (SV = EV - PV).
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