October 30, 2016 admin

Service Labor—Repair Shop

Sales and Cost of Sales

SERVICE LABOR—REPAIR SHOP ACCOUNT
SALES  5700/5701/5705/5706
COST OF SALES  6700/6701/6705/6706

ACCOUNT EXPLANATION

Sales: Selling price of labor performed in the repair shop and sold to customers on completed repair orders.

Cost of Sales: Cost of above labor sales.

NOTE: Dealers with competitive franchises (Non FoMoCo) separate service labor and report FoMoCo (franchise) labor in Account 5700/6700 and Non FoMoCo (other franchises) in Account 5701/6701.

*Refer to Chart of Accounts for current applicable Sales/Cost of Sales account numbers.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Labor sold on shop repair order for cash PS
    Cash Sales—Clearing 1010
      Sales—Service Labor Franchise/Other—Repair Shop 5700, 5701
      Sales—Service Labor—Quick Lane     5705
      Sales—Service Labor—Quick Lane Tires     5706
             
  Cost of repair labor sales performed PS
    Cost of Sales—Service Labor Franchise/Other—Repair Shop 6700, 6701
    Cost of Sales—Service Labor—Quick Lane 6705
    Cost of Sales—Service Labor—Quick Lane Tires 6706
      Inventory—Labor in Process 1440
             
  Labor sold on repair of vehicles damaged in transit PS
    Ford Receivable—Other 1200
    Other Receivable   1130  
      Sales—Service Labor Franchise/Other—Repair Shop 5700, 5701
             
  Labor costed out at the time of repair of vehicles damaged in transit PS
    Cost of Sales—Service Labor Franchise/Other—Repair Shop 6700, 6701
      Inventory—Labor in Process 1440
           
  Record the discount fee on repair work involving use of a credit card PS  
    Accounts Receivable—Service   1121
    Professional and Service Fees   9620  
      Sales—Service Labor Franchise/Other—Repair Shop     5700, 5701
    Cost of Sales—Service Labor Franchise/Other—Repair Shop   6700, 6701
      Inventory—Labor in Process     1440
COMMENTS
Calculation of Cost of Sales of Repair Shop Labor
Cost of sales of repair shop labor may be calculated by one of the two methods outlined below:
a. At actual cost: that is, labor time multiplied by the hourly rate of the technician who did the work. Where technicians are paid on the basis of a percentage of each labor sale, the cost of each labor sale is computed by multiplying the amount of the sale by the technician’s percentage.
b. At a weighted average hourly cost of technician’s labor computed as in the following example:
Number of
Technicians
2
3
2
7		 Hourly
Rate
$8.00
 8.50
 9.00		 Total Cost
per Hour
$16.00
 25.50
 18.00
$59.50
Weighted average labor cost per hour: $59.50 divided by 7=$8.50
The above assumes that all the technicians work the same number of hours each week.