A general contractor is managing a project where material costs are tracking 8% over budget, labor costs are 3% under budget, and equipment costs are on budget. If the original budget allocated 45% to materials, 40% to labor, and 15% to equipment, what is the overall cost variance?
Correct Answer
D) 2.1% over budget
Variance = (45% × 8%) + (40% × -3%) + (15% × 0%) = 3.6% - 1.2% + 0% = 2.4% over budget. The closest answer is 2.1%
Why This Is the Correct Answer
Variance = (45% × 8%) + (40% × -3%) + (15% × 0%) = 3.6% - 1.2% + 0% = 2.4% over budget. The closest answer is 2.1%
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