Question

6. A project to build a new taxiway at Culpepper Airport is 5 days behind at day 65. It had a planned cost of $735,000 for this point in time, but the actual cost is only $550,000. Estimate the variances

Answer 1

Answer:

Schedule Variance is - $223,500

Cost Variance = - $38,500

Explanation:

Difference between the two values are variance it could be positive and negative variance.

As per gicen data

Planned Value = PV = $735,000

Actual Cost = AC = $550,000

Completion ratio = Days spent / Total days = 65 / ( 65 + 5 ) = 0.93

Earned value = EV = Actual cost x completion ratio = $550,000 x 0.93 = $511,500

Schedule Variance (SV) = EV–PV = $511,500 - $735,000 = - $223,500

Cost Variance (CV) = EV–AC = $511,500 - 550,000 = - $38,500