Dean McCrary Volkswagen had the following data for the year's operations: (Click the icon to view...
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Dean McCrary Volkswagen had the following data for the year's operations: (Click the icon to view the data.) The president of the dealership has long regarded the markup on material and labor for the parts and service activity as the amount that is supposed to cover all parts and service overhead plus some general overhead of the dealership. In other words, the parts and service department is viewed as a cost-recovery operation, while the sales of vehicles is viewed as the income-producing activity. Read the requirements. Requirement 1. Prepare a departmentalized operating statement that harmonizes with the views of the president. (Enter a "U" for any zero-balances.) Data table Parts and Service Vehicles Sales of vehicles $ 3,200,000 300000 3200000 Sales Sales of parts and service 300,000 Cost of sales 1920000 Cost of vehicle sales 1,920,000 Parts and service materials 60000 Parts and service materials 60,000 Parts and service labor 120000 Parts and service labor 120,000 Sales commissions 32000 Parts and service overhead 48,000 Subtotal of costs 180000 1952000 General dealership overhead 172,000 180000 1248000 Markup on variable material and labor* Advertising of vehicles 130,000 Parts and service overhead 48000 Sales commissions, vehicles 32,000 Advertising 130000 Sales salaries, vehicles 76,000 Sales salaries 76000 General dealership overhead 132000 Net income Print Done * Roughly equivalent to contribution margin Dean McCrary Volkswagen had the following data for the year's operations: (Click the icon to view the data.) The president of the dealership has long regarded the markup on material and labor for the parts and service activity as the amount that is supposed to cover all parts and service overhead plus some general overhead of the dealership. In other words, the parts and service department is viewed as a cost-recovery operation, while the sales of vehicles is viewed as the income-producing activity. Read the requirements. Requirement 1. Prepare a departmentalized operating statement that harmonizes with the views of the president. (Enter a "U" for any zero-balances.) Data table Parts and Service Vehicles Sales of vehicles $ 3,200,000 300000 3200000 Sales Sales of parts and service 300,000 Cost of sales 1920000 Cost of vehicle sales 1,920,000 Parts and service materials 60000 Parts and service materials 60,000 Parts and service labor 120000 Parts and service labor 120,000 Sales commissions 32000 Parts and service overhead 48,000 Subtotal of costs 180000 1952000 General dealership overhead 172,000 180000 1248000 Markup on variable material and labor* Advertising of vehicles 130,000 Parts and service overhead 48000 Sales commissions, vehicles 32,000 Advertising 130000 Sales salaries, vehicles 76,000 Sales salaries 76000 General dealership overhead 132000 Net income Print Done * Roughly equivalent to contribution margin
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