CAPM (Certified Associate in Project Management) Practice Exam

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How is Cost Variance (CV) calculated?

CV = EV + AC
CV = PV - AC
CV = AC - EV
CV = EV - AC

The correct answer is: CV = EV - AC

Cost Variance (CV) is calculated by subtracting the Actual Cost (AC) from the Earned Value (EV). This is because Cost Variance measures the difference between the budgeted cost of work performed (Earned Value) and the actual cost incurred (Actual Cost). Therefore, options A, B, and C are incorrect because they either add or subtract the wrong values. Option A adds the Actual Cost to the Earned Value, option B subtracts the Actual Cost from the Planned Value (PV), and option C subtracts the Earned Value from the Actual Cost. These calculations would result in inaccurate Cost Variance values and would not provide an accurate representation of the project's cost performance.