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Warren Ford Income Statement 1991-1992 Description Sales Revenue Total Sales Cost Of Sales Sales Commission Service

Expenses Product Expenses Contribution Margins % CM vs Sales Periode Expenses Interest Expense Advertising Expense Depreciation Expense Other Expense General and Administrative expenses News 653,761 473,547 51,456 525,003 128,758 19.69% Used 254,978 161,319 23,785 185,104 69,874 27.40% 197,083 197,083 (9,142) -4.86% Services 187,941

Total Periode and General and Administrative expenses Profit Before Tax

Description Sales Trade in Cash Basis Cost Blue Book Cost Commision Recondition Transmission Total Cost Contribution Margin Payment Schema Mercury 1993 Price Used Car Cash Service Rules Materials outside inside Used Car $ $ $ $

New 16,400 $ 7,400 9,000 13,600 $

New* 15,200 $

Used 7,899

13,600 $ $ $ 13,600 $ 1,600 $ 10.5% 15,200 6,200 9,000

7,400 300 900 8,600 (701) -8.9%

$ $

13,600 $ 2,800 $ 17.1% 16,400 $ 7,400 $ 9,000 $

$ $ $

30% from cost as overhead 15% from cost as overhead

Car Price Cost Price Trade in Recondition Transmission Overhead Cost

Services 1,200

Total 25,499

21,000 300 900 1,200 0.0% 600 1,800 23,400 2,099

blue book

15,600 6,200 300 900 180

15%

Warren Ford Income Statement 1991-1992 Description Sales Revenue New Cars Used Cars Service to Outsiders Total Sales Cost Of Sales Cost of New Cars Sold Allowances on Traders Sales Commission,new Sales Commission,used Service Expenses Reconditioning Outside Customers Product Expenses Contribution Margins Periode Expenses Interest Expense Advertising Expense Depreciation Expense Other Expense General and Administrative expenses Total Periode and General and Administrative expenses Profit Before Tax Amount 653,761 254,978 187,941 1,096,680 473,547 161,319 51,456 23,785 51,110 145,973 907,190 189,490 24,765 2,432 9,976 4,893 38,400 80,466 109,024 Total

Cost - Chuck Farley - Ralph Sawchuck - Finally Payment Customer Paid Used Car Price Used Cars - Need new transmission 13,600

dealing Purchase 16,400.00 Mercury 1993

Trade in 6,200 1989 popular car

9,000 7,400.00

1989 popular car

Collect Information Restored liquidity and profitability to the dealership - reduction in the work force - tight cost control of the service center - stronger rewards for sales and service activity - reductions in its inventory - sales of many used cars at local wholesale auction - increase new car sales Second owner was not as aggressive as the forst in advertising and promotion Didn't offer leasing services

Responsibility Centers ---> all department treated as a profit center--> rumors that rewards system had caused mu - Chuck Farley New Car Manager - Ralph Sawchuck Used Car Manager - Chuck Watt Service Manager

The new car manager had the option of selling trade-ins to the used car manager or wholesale at the weekly auct The used car manager had the option of purchasing the trade-ins from the new car manager or could purchase us The service manager was obliged to give first priority to service the new and used cars of the dealership and was f

hat rewards system had caused much tension

r or wholesale at the weekly auction car manager or could purchase used cars at the auction or from any other source d cars of the dealership and was free to service outside customers as he had both the opportunity and the slack capcaity

he slack capcaity

Warren Ford Income Statement 1991-1992 Description Sales Revenue Total Sales Cost Of Sales Sales Commission Service Expenses Product Expenses Contribution Margins % CM vs Sales Periode Expenses Interest Expense Advertising Expense Depreciation Expense Other Expense General and Administrative expenses News 653,761 473,547 51,456 525,003 128,758 19.69% 197,083 197,083 (9,142) -4.86% Services 187,941

Total Periode and General and Administrative expenses Profit Before Tax

Transfer Price New Car Price Commision Cost Blue Book Cost Commision Recondition Transmission Total Cost Contribution Margin Total Cost Laba Bagi Department New Laba Bagi Department Used $

New 16,400 $

Used

Total

15,600 $ 32,000

$ $

$ $ $ $ $

13,600 810 $ $ $ 14,410 $ 1,990 $ 16,960 12,779 2,261

1,170 345 1,035 2,550 13,050

$ 13,600 $ 1,980 $ 345 $ 1,035 $ 16,960 $ 15,040

Payment Schema Mercury 1993 Price Used Car Cash Service Rules

$ $ $

16,400 7,400 9,000

Materials outside inside Used Car Car Price Cost Price Trade in Recondition Transmission Overhead Cost

30% from cost as overhead 15% from cost as overhead blue book 15,600 6,200 300 900 180

Description New Car Price Sales Used Car Commision Cost Blue Book Cost Commision Recondition Transmission Total Cost Contribution Margin Payment Schema Mercury 1993 Price Used Car Cash

Schema 1 Schema 2 $ 16,400 $ 16,400 $ 7,400 $ 7,899

$ 13,600 $ 13,600 $ 810 $ 810 $ 300 $ 300 $ 900 $ 900 $ 15,610 $ 15,610 $ 8,190 $ 8,689 49.9% 53.0% $ 16,400 $ 15,200 $ 7,400 $ 6,200 $ 9,000 $ 9,000

Description Sales Trade in Cash Basis Cost Blue Book Cost Commision Recondition Transmission Total Cost Contribution Margin

Used $ 7,899

Used* 7,899

Opp. Cost Services 1,200

$ 7,400 300 900 $ 8,600 $ (701) -8.9%

6,200 300 900 7,400 499 6.3%

1,200 1,200 (1,200) 300 900 1,200 0.0%

Services* 1,600.00

Opp. Cost Total* (400) (400)

300 900 1,200 400 25.0%

(400)

1,200 1,200 (1,600)

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