What is Cost Variance?

A) the difference between the amount budgeted and the amount actually spent for the work performed

B) the varying cost of what a project might take to complete

C) the total cost of altering the course of a project to complete it in the time allotted

D) the sum of the highest and lowest approximated budgets for a project, divided by 2

A) Cost Variance is the difference between the amount budgeted and the amount actually spent for the work performed on a project.

Exactly.

Yes, “simple” cost variance is the difference between the amount budgeted (PV or Planned Value) and the amount actually spent for the work performed — referred to as AC or ACWP (Actual Cost of Work Performed). It will tell you nothing more than whether or not you are spending money as planned (under or over your approved time-phased budget). Cost Variance (CV) usually — and per the PMBOK Guide — refers to a vairance metric employed in Earned Value Management. CV is calcuated as Earned Value (EV or Budgeterd Cost of Work Performed) minus AC. This tells whether or not you are accomplishing scope (earning value) as planned for the money spent as of a particuar time.

Khaled,

The answer is a little strangely worded, but it is correct. If we rephrase the answer: The difference between the amount budgeted for the work performed (i.e earned value) and the amount actually spent for the work performed (i.e. actual cost.)

PV is the budget for the work scheduled, which is not mentioned in the answer.

Sorry, not true.

PMBOK Definition:

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The amount of budget deficit or surplus at a given point in time expressed as the difference between the earned value and the actual cost.

CV = EV-AC NOT CV = PV-AC