You are leading a software development project using a predictive approach. The project has been ongoing for three months, and you need to report the current status to stakeholders. You calculate that the project has completed $150,000 worth of work, but you have actually spent $175,000. The planned value at this point was $160,000. What is the cost variance (CV) for this project?

Question

Accepted Answer

The correct answer is D. Cost variance (CV) is calculated as earned value (EV) minus actual cost (AC). In this case, CV = $150,000 - $175,000 = -$25,000. A negative variance indicates the project is over budget. Option C ($25,000) is incorrect because it shows the magnitude but with the wrong sign—positive would indicate under budget, which contradicts the scenario where more was spent than earned. Options A and B incorrectly use planned value in the calculation, but CV specifically measures the difference between what you earned and what you spent, not what you planned.

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