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How to calculate Cost variance

The Cost variance formula, with plain worked examples you can check yourself.

Cost variance = EV − AC

Worked examples

EV = 5000 · AC = 3000Cost variance = 2,000
EV = 6000 · AC = 2000Cost variance = 4,000
EV = 5000 · AC = 2000Cost variance = 3,000

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Control & Review.

Related terms

VarianceScope creepRetrospectiveContingency planAgileRisk management

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