CAPM (Certified Associate in Project Management) Practice Exam

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What formula represents the cost performance index?

CPI = AC/EV
CPI = EV - AC
CPI = EV/AC
CPI = AC/EV

The correct answer is: CPI = EV/AC

The correct formula for the cost performance index (CPI) is CPI = EV/AC. This formula represents the ratio of earned value (EV) to actual cost (AC). The CPI helps project managers understand how efficiently budgeted resources are being used on a project. It indicates whether the project is under budget (CPI > 1), on budget (CPI = 1), or over budget (CPI < 1). Option A (CPI = AC/EV) is incorrect because the correct formula is EV/AC, not AC/EV. Option B (CPI = EV - AC) is not the correct representation of the cost performance index formula. Option D (CPI = AC/EV) has the ratio reversed compared to the correct formula. Therefore, the correct answer is option C (CPI = EV/AC).