Dean McCrary Volkswagen had the following date for the year's operations: (Cick the icon to view the data.) The president of the dealership has long regarded the markup on material and laber for the parts and service activity as the amount that is supposed to cover all parts and service overhead plus some general ovechead of the dealership. In other words, the parts and sorvice department is viewed as a costrecovery operation, while the sales of vehicles is viewed as ehe income-producing activity. Fead the Sales Cost of sales Parts and service materials Parts and service labor Sales commissions Subtotal of costs Markup on variable material and labor* Parts and service overhead Advertising Sales salaries Direct allocation of general overhead Departmental contribution to net income General overhead not allocable Net income of the dealership as a whole - Roughly equivalent to contribution margin Requirement 1. Prepare a departmentalized operating statement that harmonizes with the views of the president, (Enter a "or for any zero-balances.) Requirements 1. Prepare a departmentalized operating statement that harmonizes with the views of the president. 2. Prepare an alternative operating statement that would reflect a different view of the dealership operations. Assume that $22,000 and $123,000 of the $188,000 general overhead can be allocated with confidence to the parts and service department and to sales of vehicles, respectively. The remaining $43,000 cannot be allocated except in some highly arbitrary manner. 3. Comment on the relative merits of numbers 1 and 2 . Dean McCrary Volkswagen had the following date for the year's operations: (Cick the icon to view the data.) The president of the dealership has long regarded the markup on material and laber for the parts and service activity as the amount that is supposed to cover all parts and service overhead plus some general ovechead of the dealership. In other words, the parts and sorvice department is viewed as a costrecovery operation, while the sales of vehicles is viewed as ehe income-producing activity. Fead the Sales Cost of sales Parts and service materials Parts and service labor Sales commissions Subtotal of costs Markup on variable material and labor* Parts and service overhead Advertising Sales salaries Direct allocation of general overhead Departmental contribution to net income General overhead not allocable Net income of the dealership as a whole - Roughly equivalent to contribution margin Requirement 1. Prepare a departmentalized operating statement that harmonizes with the views of the president, (Enter a "or for any zero-balances.) Requirements 1. Prepare a departmentalized operating statement that harmonizes with the views of the president. 2. Prepare an alternative operating statement that would reflect a different view of the dealership operations. Assume that $22,000 and $123,000 of the $188,000 general overhead can be allocated with confidence to the parts and service department and to sales of vehicles, respectively. The remaining $43,000 cannot be allocated except in some highly arbitrary manner. 3. Comment on the relative merits of numbers 1 and 2
