The following information is provided on a project as at the end of 8 months. As
ID: 331704 • Letter: T
Question
The following information is provided on a project as at the end of 8 months. Assume that the cost of each activity is linearly distributed over its duration
If data from time sheets and other accounting records indicate that the actual amount of money spent on the project so far (i.e. at the end of 8 months) is $6,900, determine the following for the entire project
the cost variance,
Activity Duration (Month) Predecessors Total Budgeted Cost % Comp @ 8 Months A 2 800 100 B 6 A 3600 80 C 5 A 1500 100 D 4 B 1600 - E 3 C 900 66.7 F 3 D, E, G 600 - G 1 A 600 0Explanation / Answer
During 1st 8 months, A must be complete, B must be complete, C must be complete and 1/3 of E must be complete.
2 months + 6 months (C gets accomplished during these 6 months and E starts)
Earned value = 800 + 0.80* 3600+1500+ 0.66*900 = $5780 (Note - only 80% of B is completed)
Actual cost = $6900
Cost variance = EV - Actual = - $ 1120 , We are running over budget.
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