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Cost Management Flashcards

7 cards from real CAPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A project manager notices the CPI has been consistently 0.80 for the past three reporting periods. Using the EAC = BAC / CPI formula, what assumption is being made?

    Answer: Current efficiency will continue throughout the project

    EAC = BAC / CPI assumes current cost efficiency (CPI) will persist for all remaining work on the project.

  2. What is the formula for Variance at Completion (VAC)?

    Answer: VAC = BAC - EAC

    VAC = BAC - EAC; a positive VAC indicates the project will finish under budget, while negative means over budget.

  3. In the cost management plan, the level of precision refers to:

    Answer: The rounding rules applied to cost estimates

    Level of precision defines the rounding convention for activity cost estimates, such as rounding to the nearest dollar or thousand.

  4. A project manager is asked to provide a rough order of magnitude (ROM) estimate. What accuracy range is typically associated with ROM estimates?

    Answer: -25% to +75%

    ROM estimates typically have an accuracy range of -25% to +75%, as they are prepared early with limited information.

  5. Which document formally authorizes the project manager to apply organizational resources and includes a summary-level budget?

    Answer: Project charter

    The project charter authorizes the project, names the project manager, and includes a summary budget.

  6. When a project finishes with AC = $95,000 and BAC = $100,000, and EV = $100,000, what is the final Cost Variance?

    Answer: +$5,000

    CV = EV - AC = $100,000 - $95,000 = +$5,000, meaning the project finished $5,000 under budget.

  7. Life cycle costing is a technique that considers:

    Answer: The total cost of ownership including development, operation, and disposal

    Life cycle costing evaluates total cost of ownership across the entire product life cycle, including acquisition, operation, maintenance, and disposal.