October 30, 2016 admin

Parts—Internal—Body Shop

Sales and Cost of Sales

PARTS—INTERNAL—BODY SHOP ACCOUNT
SALES  5530/5531
COST OF SALES  6530/6531

ACCOUNT EXPLANATION

Sales: Internal selling price of parts sold to other departments in connection with new vehicle preparation, installation of accessories on new vehicles, used vehicle reconditioning, and maintenance of company vehicles.

Cost of Sales: Inventory value of internal parts sold.

NOTE: Dealers with competitive franchises (Non FoMoCo) separate parts and report FoMoCo (franchise) in Account 5530/6530 and Non FoMoCo (other franchises) in Account 5531/6531.

*Refer to Chart of Accounts for current applicable Sales/Cost of Sales account numbers
TRANSACTIONS
  Jrnl. Dr. Cr.
  Reconditioning work on used car I
    Inventory—Used Cars Franchise/Other 1350, 1130
      Sales—Parts—Internal—Body Shop (at internal rate) Franchise/Other 5530, 5531
    Cost of Sales—Parts—Internal—Body Shop Franchise/Non Franchise 6530, 6531
      Inventory—Parts—Ford/Other 1400, 1410
             
  Body Shop parts installed on company vehicle I
    Equipment & Vehicle Maintenance—General 8780
      Sales—Parts—Internal—Body Shop (at internal rate) Franchise/Other 5530, 5531
    Cost of Sales—Parts—Internal—Body Shop Franchise/Other 6530, 6531
      Inventory—Parts—Ford/Other 1400, 1410
COMMENTS
  • Parts sold to other departments should be priced at a level sufficient to recover the direct cost of the parts plus an equitable share of the overhead of the parts department and should not exceed the retail selling price. Two suggested methods of calculating internal parts sales prices are outlined below:
Method 1
Total annual parts department expense
  (Parts sales expense plus the assigned portion of fixed expense from the Departmental Profit Summary, Form FMC 101, or total parts department expense form the Departmental Income and Expense Statement, Form FMC 102)
  Divided by annual cost of parts sales, X 100%
  Equals the percentage to be added to the cost of parts sold internally.
Method 2
  Price parts sold to other departments at inventory cost plus 25%.
  • Parts used within the parts department should be charged to the appropriate asset or expense account at cost.