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You have recently been appointed as the Cost Engineer to oversee process improvement projects for a Discrete Part Manufacturer. You have been asked to calculate the CPI on a project initiated to implement a Value Stream Mapping Initiative. The accountant is only able to provide you with BAC and EAC figures of $ 5000 and 57500 respectively. The CPI is:
unable to be calculated from the information given
Suggested Answer: A
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The Cost Performance Index (CPI) is calculated using the formula:
CPI = BAC / EAC
Given:
Budget at Completion (BAC) = $50,000
Estimate at Completion (EAC) = $57,500
CPI = $50,000 / $57,500 = 0.8696
Since CPI < 1, it indicates that the project is over budget. The correct answer is A. <1.
30 comments · newest first
LA
Laurene
11 months ago
I think it’s definitely <1 based on those numbers.
MA
Margurite
11 months ago
Really? I thought we could figure it out somehow.
NI
Nicolette
11 months ago
Wait, isn't BAC supposed to be less than EAC for this?
IN
In
12 months ago
Totally agree, we need more data!
EU
Eugene
12 months ago
CPI can't be calculated with just BAC and EAC.
KI
Kina
1 year ago
If EAC is greater than BAC, then CPI should be less than 1, right? But I still think we can't calculate it with the info given.
CA
Carlota
1 year ago
This reminds me of a practice question where we had to find CPI, but we had all the necessary values. I feel like this one is tricky.
GL
Glory
1 year ago
I think we might need the actual costs or earned value to calculate CPI. Just having BAC and EAC doesn't seem enough.
GL
Glenna
1 year ago
I remember that CPI is calculated using EV and AC, but we only have BAC and EAC here. I'm not sure how to proceed.
SA
Salena
1 year ago
I'm a bit confused here. The question says the CPI is unable to be calculated from the information given, so I don't think any of the answer choices are correct. I'll need to double-check the CPI formula and the data provided.
MI
Micheline
1 year ago
I think I've got this. The CPI is the ratio of earned value to actual cost, and since we have the BAC and EAC, we can calculate the CPI as EAC/BAC, which would be 57500/5000 = 11.5, so the answer is D.
NO
Nobuko
1 year ago
Okay, let me see. We have the BAC and EAC, but no information on the actual costs or earned value. I'm not sure if I can determine the CPI from this.
SH
Sharen
1 year ago
Hmm, this looks like a tricky one. I'll need to think through the CPI formula carefully to figure out if I can calculate it with the information given.
BA
Barbra
1 year ago
Alright, let me walk through this step-by-step. The CPI formula is EV/AC, but we don't have the actual cost (AC) information. The question states that the CPI cannot be calculated, so I think the answer is A.
SK
Skye
1 year ago
Okay, let me break this down. The key is understanding the purpose of the life cycle. I'll start by considering each option carefully.
ST
Stephen
2 years ago
I see your point, Tony. So, the answer would be D) >1 then.
TO
Tony
2 years ago
But isn't the CPI always calculated as EV/AC? So, in this case, it would be greater than 1.
TH
Theodora
2 years ago
Ha, the accountant really dropped the ball here! Without the actual costs, there's no way to calculate the CPI. A is the way to go.
RE
Reed
2 years ago
Ha, the accountant really dropped the ball here! Without the actual costs, there's no way to calculate the CPI. A is the way to go.
IS
Isabella
2 years ago
A) <1
AI
Aimee
2 years ago
Looks like we need the actual costs and planned costs to figure out the CPI. Going with A on this one.
RH
Rhea
2 years ago
I agree, the information given is not enough to determine the CPI. This is a trick question, but I think A is the right answer.
ER
Ernest
2 years ago
I agree, the information given is not enough to determine the CPI.
AL
Albina
2 years ago
I think A is the right answer.
SY
Sylvia
2 years ago
I agree with Shantay, we need more data to calculate the CPI.
SH
Shantay
2 years ago
I think the CPI can't be calculated from the given information.
SH
Shonda
2 years ago
Hmm, without the actual cost and schedule figures, there's no way to calculate the CPI. This is tricky, but I guess the correct answer is A.
CO
Coleen
2 years ago
It's definitely a tricky situation, but I believe the accountant needs to provide more details for us to accurately calculate the CPI.
SU
Suzi
2 years ago
Yes, I think the correct answer is A because we can't determine if it's less than or greater than 1 without the actual cost and schedule data.
VI
Viola
2 years ago
I agree, without the necessary information, it's impossible to calculate the CPI.