PMP Cost Variance (CV) Practice Question
You are managing a project that is currently in the execution phase. The project has a cost baseline of $500,000. At the end of month 3, the planned value (PV) is $150,000, the actual cost is $150,000 and the earned value is $120,000. The project manager calculates the cost variance (CV) and schedule variance (SV). What do the results indicate?
⚠ Common exam trap
Ensure you use the correct formula for schedule variance: SV = EV - PV, not EV - AC. Cost variance uses AC, schedule variance uses PV.
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 and behind schedule.
CV = EV - AC = $120,000 - $150,000 = -$30,000. A negative CV indicates the project is over budget. SV = EV - PV = $120,000 - $150,000 = -$30,000. A negative SV indicates the project is behind schedule. Therefore, the project is over budget and behind schedule, making option D correct.
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 and ahead of schedule.
Why it's wrong here
Although CV is negative (over budget), SV is negative (behind schedule), not ahead.
- ✗
The project is under budget and ahead of schedule.
Why it's wrong here
CV is negative (over budget), not under budget.
- ✗
The project is under budget and behind schedule.
Why it's wrong here
CV is negative (over budget), not under budget.
- ✓
The project is over budget and behind schedule.
Why this is correct
CV = -$30,000 (over budget) and SV = -$5,000 (behind schedule).
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