Collision Repair Job Costing

Set the basis before the formula

Start with one repair order, one estimate version, and one review date. Record the approved pre-tax sales amount and identify whether the job is open, delivered, or financially complete. A pending supplement belongs in a separate expected-sales field until its status supports inclusion in your chosen basis.

Use consistent categories: labor, parts, paint materials, and sublet. Keep sales tax outside this operating comparison. Gross profit is sales less direct costs; it does not establish net business profit after overhead and other expenses. Intuit makes the same distinction between invoice gross profit and overhead. Agree on the accounting treatment with your bookkeeper so the RO review can be reconciled with the books.

Work one repair from sales to margin

The following example is illustrative. It assumes $10,000 in pre-tax sales and $6,500 in assigned direct costs. The labor figure is a modeled cost, so the result is an operating estimate rather than an actual-payroll calculation.

Gross profit is $10,000 minus $6,500, or $3,500. Gross margin is $3,500 divided by $10,000, or 35%. Markup is $3,500 divided by $6,500, or about 53.85%. Margin uses sales as its denominator; markup uses cost. They describe the same dollars from different directions and are not interchangeable.

Give every cost an evidence status

For parts, reconcile the purchase order, quantity received, and vendor invoice. A return is a separate event from a credit. Keep an expected credit on the follow-up list, and reduce the recorded cost only when the credit is verified under your shop's accounting policy. Retain the original invoice and credit reference so a reviewer can follow the change.

A missing invoice never means zero cost. Mark it missing, record a provisional amount separately when available, and flag the job as incomplete. For example, removing the $900 sublet cost from the example would falsely lift its displayed margin to 44%. That is an evidence gap, not improved performance.

Use a source reference and status for every category: invoice confirmed, modeled, provisional, or missing. This makes the most useful next action visible before anyone ranks jobs by margin.

Keep modeled costs identifiable

Booked labor hours multiplied by a configured cost rate can help compare repairs consistently. It does not tell you the actual wages, benefits, or payroll burden incurred on that repair. Recorded job time is another measure, and incomplete timers do not prove that a technician completed work unusually quickly.

Write the method beside the value. For example: “Labor cost modeled from booked hours and department rates; payroll not reconciled.” If you later assign actual labor costs, show the change in method rather than silently comparing the new figure with older modeled jobs.

Do the same for paint materials. Identify whether the cost comes from recorded mix consumption, assigned purchases, or an hourly model. Intuit's job-costing guidance distinguishes budget assumptions from actual spending. The useful management question is why they differ on this repair.

Review the exception, then the trend

Use the ro job-costing worksheet to review a few recently delivered ROs with the advisor, parts lead, and bookkeeper. Start with missing costs, unverified credits, pending supplements, and changes after delivery. Assign each exception an owner and a follow-up date. A second review should confirm that the evidence arrived and the numbers changed correctly.

Next, investigate the largest category difference. A low sublet margin might reflect an omitted invoice line, an approved pricing decision, or work that expanded after authorization. Record the explanation. Comparing only the final percentage hides these different causes and gives the team little to improve.

When comparing periods, use the same job status and cost method, and show how many jobs have complete cost coverage. Avoid treating an unfinished month as a settled result.

Connect the review to the RO

AutoHound's Gross Profit report reviews pre-tax job profit after parts, sublet, paint materials, and modeled labor costs based on booked hours and configured rates. It is not a payroll report. Its parts workflow keeps purchase orders, receipts, invoices, returns, and credits connected, giving the review a path back to the underlying records.

Shop checklist

• Confirm the RO, estimate version, review date, and pre-tax sales basis.
• Reconcile parts and sublet invoices; flag missing documents.
• Apply verified credits and track expected credits separately.
• Identify modeled labor and material costs beside the values.
• Calculate gross profit, margin, and markup using the correct denominator.
• Assign each unresolved difference an owner and follow-up date.

All worked examples are illustrative, not customer results or industry benchmarks. This guide covers shop workflow and recordkeeping, not legal, tax, or accounting advice. Confirm requirements with your qualified advisers.