460B Service Contracts Customer Labor - Cars & Light Duty Trucks

460B Service Contracts Customer Labor – Cars & Light Duty Trucks

461B Service Contracts Customer Labor – Commercial, Fleet, & Medium Duty Trucks

460F Service Contracts Customer Labor EV – Cars & Light Duty Trucks

461F Service Contracts Customer Labor EV – Commercial, Fleet & Medium Duty Trucks

Sales

Fixed Operations

Sales Synopsis

Accounts 460B and 461B are established to record Service Contract Labor sales on ICE vehicles paid by Service Contract Underwriters including GMPP for repairs performed under Service Contract coverage by the Mechanical Department. Account 460B is for ICE Cars & Light Duty Trucks and Account 461B is for Commercial, Fleet & ICE Medium Duty Trucks.

Debits

Credits

Selling price of mechanical labor performed under the coverage of Service Contracts
Revenue from sources such as towing, battery-charge services and washes in connection with mechanical repairs

660B Service Contract Customer Labor – Cars & Light Duty Trucks

661B Service Contract Customer Labor – Commercial, Fleet, & Medium Duty Trucks

660F Service Contracts Customer Labor EV – Cars & Light Duty Trucks

661F Service Contracts Customer Labor EV – Commercial, Fleet & Medium Duty Trucks

Cost of Sales

Fixed Operations

Cost of Sales Synopsis

Accounts 660B and 661B, respectively, are established to record the Cost of Sales, which is defined as compensation paid to technicians, for Service Contract Mechanical Labor on ICE vehicles.

Debits

Credits

Cost of mechanical labor related to Service Contract labor sales

Example 1

Record a customer repair order for a service contract repair in the amount of $305 on an ICE vehicle. The service contracts customer labor sale is $170. The parts sale is $120. The shop supplies are $9 and the sales tax is $6. The cost of the labor is $40. The parts cost is $80 and the shop supplies is $7.

Journal: Service Sales - Charge

Entry:		Debit	Credit
Account 220B	Accounts Receivable – Customers – Service & Parts	$305
Account 660B	Cost of Sales – Service Contracts Customer Labor – Cars & Light Duty Trucks	$40
Account 667	Cost of Sales – Parts – Mechanical Repair Orders – Cars & Light Duty Trucks	$80
Account 669	Cost of Sales – Shop Supplies	$7
Account 242	Inventory – Parts & Accessories		$80
Account 242	Inventory – Parts & Accessories		$7
Account 247A	Inventory – Work in Process - Mechanical		$40
Account 460B	Sales – Service Contracts Customer Labor – Cars & Light Duty Trucks		$170
Account 467	Sales – Parts – Mechanical Repair Orders – Cars & Light Duty Trucks		$120
Account 469	Sales – Shop Supplies		$9
Account 324	Sales Taxes Payable		$6

Example 2

Record a customer repair order for a service contract repair in the amount of $443 on an Electric vehicle. The service contracts customer labor is $200. The parts sale is $220. The shop supplies are $11 and the sales tax is $12. The cost of the labor is $50. The parts cost is $150 and the shop supplies cost is $8.

Journal: Service Sales - Charge

Entry:		Debit	Credit
Account 220B	Accounts Receivable – Customers – Service & Parts	$443
Account 661F	Cost of Sales – Service Contracts Customer Labor EV –– Commercial, Fleet, & Medium Duty Trucks	$50
Account 668E	Cost of Sales – Parts – Mechanical Repair Orders EV – Commercial, Fleet, & Medium Duty Trucks	$150
Account 669	Cost of Sales – Shop Supplies	$8
Account 242	Inventory – Parts & Accessories		$150
Account 242	Inventory – Parts & Accessories		$8
Account 247A	Inventory – Work in Process – Mechanical		$50
Account 461B	Sales – Service Contracts Customer Labor EV – Commercial, Fleet, & Medium Duty Trucks		$200
Account 468E	Sales – Parts – Mechanical Repair Orders EV – Commercial, Fleet, & Medium Duty Trucks		$220
Account 469	Sales – Shop Supplies		$11
Account 324	Sales Taxes Payable		$12

Note:

It is recommended that whenever practicable labor sales be costed on actual basis because material losses of productive time may be concealed by the inaccuracies inherent in percentage costing methods. Such inaccuracies can result from failure to update costing percentages when changes occur in the compensation of technicians and in the structural of selling prices of labor, and other reasons.

Assure that Repair Order templates, and accounting are set up correctly by the DSP and maintained whenever technicians have payroll changes. Technician incentives or bonuses should be considered cost of labor sales and debited to A/C 665 and 675 as applicable. However, holiday, vacation, and sick pay should not be charged to Cost of Labor Sales, but as a non-productive wage expense in A/C 24 - Absentee Compensation.

Before closing each month, assure that the balance in A/C 247 - Work in Process, matches the total cost of labor on open (unclosed) R.O.'s, any difference should be adjusted to A/C 665 or 675 - Labor Adjustment.