You are the project manager of the NHA Project. This project is expected to last one year with
quarterly milestones throughout the year. Your project is supposed to be at the third milestone
today, but you are likely to be only 60 percent complete. Your project has a BAC of $745,000 and
you have spent $440,000 of the budget-to-date. What is your cost variance for this project?

A.
11,667

B.
$-111,750

C.
There is no variance.

D.
$7,000

Explanation:
The cost variance is the earned value minus the actual costs. In this project, you have spent less
than what the project is worth, so the project has a positive cost variance. Cost variance (CV) is a
measure of cost performance on a project. The variance notifies if costs are higher than budgeted
or lower than budgeted. The cost variance is calculated based on the following formula: CV =
Earned Value (EV) – Actual Cost (AC) A positive value means that spending is less than budgeted,
whereas a negative value indicates that costs are higher than originally planned for the project.
Answer option B is incorrect. -$111,750 is the cost variance of the project.

Answer option A is incorrect. This is the variance at completion for the project.
Answer option C is incorrect. There is a cost variance, albeit a positive one.