Variance Analysis

Lionel Train Company has the following information for this year and next year.

Current Next

Year Year

Trains purchased 40,000 48,000

Trains scrapped in production 4,000 3,000

Trains sold 36,000 45,000

Average Selling Price $150.00$140.00

Average Cost per Train $100.00$90.00

Calculate the Growth, Price and Productivity variances for next year.

Indicate if the variance is favorable (F) or unfavorable (U).

Reconcile the revenue, costs and income for the current and next year.

4A - Growth

4B - Price-Recovery

4C - Productivity

4D - Reconcile the variances in income from the current year to next year.

Current Next

Year Growth Price Productivity Year

Revenue

Cost

Income

4E - What conclusions can you draw from the variance analysis: