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A project is to build four walls in four days and the budget at completion is 1000 dollars.At the end of the third day.you have completed 3 walls and spent $1000.What is your cost variance? $500 0-$500 ○-$250 ○$0

Question

A project is to build four walls in four days and the budget at completion is 1000 dollars.At the end of the third day.you have completed 3 walls and spent 1000.Whatisyourcostvariance?1000.What is your cost variance? 500 0-500○−500 ○-250 ○$0

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Solution

To calculate the cost variance, we first need to understand what it is. Cost variance (CV) is a measure of cost performance on a project. It is equal to the earned value (EV) minus the actual cost (AC).

Here's how to calculate it:

  1. Calculate the Earned Value (EV): EV is the value of the work actually completed. Since the total budget is 1000for4walls,thebudgetforeachwallis1000 for 4 walls, the budget for each wall is 250 (1000/4). Since 3 walls have been completed, the EV is 3 * 250=250 = 750.

  2. Identify the Actual Cost (AC): AC is the actual cost incurred for the work completed. In this case, it's given as $1000.

  3. Calculate the Cost Variance (CV): CV = EV - AC. So, CV = 750−750 - 1000 = -$250.

So, the cost variance is -$250.

This problem has been solved

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