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AACE International CCP Exam - Topic 3 Question 2 Discussion

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
A) <1
B) =1
C) =1
D) >1

AACE International CCP Exam - Topic 3 Question 2 Discussion

Actual exam question for AACE International's CCP exam
Question #: 2
Topic #: 3
[All CCP Questions]

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

Show Suggested Answer Hide Answer
Suggested Answer: A

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.


by Ryan at Aug 26, 2024, 10:41 PM

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Laurene
9 months ago
I think it’s definitely <1 based on those numbers.
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Margurite
9 months ago
Really? I thought we could figure it out somehow.
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Nicolette
9 months ago
Wait, isn't BAC supposed to be less than EAC for this?
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In
10 months ago
Totally agree, we need more data!
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Eugene
10 months ago
CPI can't be calculated with just BAC and EAC.
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Kina
10 months 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.
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Carlota
10 months 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.
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Glory
10 months ago
I think we might need the actual costs or earned value to calculate CPI. Just having BAC and EAC doesn't seem enough.
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Glenna
11 months 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.
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Salena
11 months 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.
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Micheline
11 months 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.
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Nobuko
11 months 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.
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Sharen
11 months 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.
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Barbra
11 months 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.
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Skye
11 months 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.
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Stephen
2 years ago
I see your point, Tony. So, the answer would be D) >1 then.
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Tony
2 years ago
But isn't the CPI always calculated as EV/AC? So, in this case, it would be greater than 1.
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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.
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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.
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Isabella
2 years ago
A) <1
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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.
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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.
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Ernest
2 years ago
I agree, the information given is not enough to determine the CPI.
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Albina
2 years ago
I think A is the right answer.
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Sylvia
2 years ago
I agree with Shantay, we need more data to calculate the CPI.
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Shantay
2 years ago
I think the CPI can't be calculated from the given information.
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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.
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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.
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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.
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Viola
2 years ago
I agree, without the necessary information, it's impossible to calculate the CPI.
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