Performance Measurement in Accounting Flashcards
7 cards from real Financial Management for Project Managers practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Performance Measurement in Accounting flashcards as text
A project manager calculates a Variance at Completion (VAC) of -$30,000. What is the correct interpretation?
Answer: The project is forecast to finish $30,000 over budget
VAC = BAC - EAC; a negative VAC means EAC exceeds BAC, forecasting a cost overrun at project completion.
Which performance reporting technique compares actual results to a rolling forecast rather than a fixed baseline?
Answer: Forecast variance analysis
Forecast variance analysis measures actual performance against a continuously updated forecast rather than the original plan.
A construction project uses the 'units completed' EVM technique. If 400 of 1,000 planned units are finished and the budget is $100,000, what is the Earned Value?
Answer: $40,000
EV = (Units Completed / Total Units) × BAC = (400 / 1,000) × $100,000 = $40,000.
A project manager is computing a project's break-even point. Which variable is NOT needed for this calculation?
Answer: Net Present Value
Break-even point = Fixed Costs / (Price - Variable Cost); NPV is not part of the break-even formula.
In the context of project financial control, what is 'cost aggregation'?
Answer: Summing cost estimates of work packages to higher WBS levels to establish the cost baseline
Cost aggregation rolls up work package estimates through control accounts to the project level to form the cost baseline.
A project used $180,000 in actual costs but planned to spend $200,000 for the same period. The EV for work completed is $160,000. Which statement correctly describes performance?
Answer: The project is both behind schedule and over budget
SV = EV - PV = $160K - $200K = -$40K (behind schedule); CV = EV - AC = $160K - $180K = -$20K (over budget).
When a project manager applies the 'weighted milestone' EVM technique, Earned Value is credited:
Answer: At defined milestones according to pre-assigned budget weights
Weighted milestones assign specific budget percentages to key deliverables; EV is earned when each milestone is achieved.