Question

The cost variance on your project is (18,000) and your earned value is92,000. What are your actual costs?

1) $110,000
2) $74,000
3) Unable to determine
4) $98,000

Answer 1

The actual costs of the project are calculated using the earned value and cost variance, with the relationship AC = EV - CV. For the given values, AC equals $110,000, which is option 1).

Step-by-step explanation:

The student's question pertains to project cost management, a subject area under business studies concerned with planning and controlling a project's budget. Specifically, it involves calculations related to earned value management (EVM), a technique used in project management to measure project performance and progress.

To find the actual costs (AC) when given the cost variance (CV) and the earned value (EV), use the following relationship derived from EVM principles: AC = EV - CV. Here, the cost variance is (18,000), which means it is a negative number, indicating the actual costs exceeded the earned value. The earned value is given as 92,000.

So the calculation to find the actual costs would be AC = 92,000 - (-18,000) = 92,000 + 18,000 = 110,000.

The actual costs for the student's project are $110,000, which corresponds to option 1).