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Question:

You are now working as a project manager working for Mail House King, which processes orders for many mail-order catalog firms. You are charge with managing the installation of new mail-sorting equipment and software. During this project, you’ve faced some problems and experienced some variances. You think these variances would endure throughout the rest of the project and expect they will be similar to the previous variances (what you’ve seen so far). In addition, you are provided with the following information: PV = 900, BAC = 1400, EV = 925, AC = 925. What is the correct ETC in this circumstance?

A 475
explanation

The formula to calculate ETC when variances are expected to continue is: ETC = (BAC – EV) ÷ CPI.
Firstly, calculate CPI: $925 ÷ $925 = $1.
Secondly, apply all the numbers into the ETC formula: ($1,400 – $925) ÷ 1 = $475.

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