Service Labor—Warranty & Policy Claims

• ACCOUNT EXPLANATION
• TRANSACTIONS
• COMMENTS

Sales: Selling price at authorized reimbursement rates of repair shop labor performed in the dealership under the warranty and policy program.

Cost of Sales: Cost of above labor sold.

NOTE: Dealers with competitive franchises (Non FoMoCo) separate service labor and report FoMoCo (franchise) labor in Account 5720/6720 and Non FoMoCo (other franchises) in Account 5721/6721. (QL/FL/QCSC) in Account 5722/6722.

*Refer to Chart of Accounts for current applicable Sales/Cost of Sales account numbers.

• The gross earnings of repair shop technicians and the productive wages of other shop employees should be charged initially to Account 1440, Inventory—Labor in Process, through the Payroll Journal.
• See Account 5700/5701/6700/6701, Sales/Cost of Sales—Service Labor—Repair Shop, for methods of calculating cost of sales of technicians’ labor on warranty repair orders.
• For explanation of warranty and policy adjustments, forms, procedures, and reimbursement rates, consult the current Warranty & Policy Manual.
• See Account 5830/5831, 6830/6831, Warranty & Policy Claims—Body Shop Franchise/Other, for warranty work performed by body shop technicians.