675 Adjustment – Cost of Labor Sales – Body Shop

Cost of Sales

Fixed Operations

Cost of Sales Synopsis

Account 675 is established to record the amount of adjustment required to reconcile Work in Process to the actual amount of labor on open repair orders.

Example 1

Record the $605 monthly adjustment to agree with the schedule of the cost of labor sales on paint & body repair orders in process.

Journal: General Journal

Note:

1. This adjustment represents the cost of mechanical technicians’ compensation for productive time, which was not applied on repair orders.

2. This account should not include wages paid to technicians for holiday, sick, vacation, or other time off.  Those hours should be charged as a salary expense.