How do you create a cost center and cost category in Tally Prime?

Cost centers and Cost categories are a part of advanced accounts. Let’s consider some examples to understand this feature.

Salaries paid in cash to Raju of Stores department of Rajam branch – Rs. 10,000/-

The company is paying the salary to Raju in this transaction. Raju is the employee of stores department in Rajam branch. However, if the company is paying, we will enter this transaction in payment voucher. In this voucher, Ledgers are salaries and cash.

Raju, stores department and the Rajam branch are the other additional things. This additional information is usually entered in the voucher, at Narration field. However, what is entered in narration is not an effect on accounting reports or other reports. That’s just an additional information. Therefore, the rest of the transaction, such as Raju, Rajam branch and stores department , should also be affected in accounting reports, which means that the feature used is Cost Centers and Cost Categories.

In this transaction, department and employee are cost categories. And Raju, Stores department are cost centers. Raju comes under cost category “employee” and Stores department comes under Cost Category “Department”.

ASSIGNMENT

Create the following cost categories

  • Departments
  • Executives
  • Projects

Create the following COST CENTERS

  • under COST CATEGORY “Department”
    • Marketing
    • Manufacturing
    • Financial Buildings
  • Under COST CATEGORY “Executives”
    • Salesman A
    • Salesman B
    • Salesman C
  • Under COST CATEGORY “Projects”
    • Airport Construction
    • Roads Construction
    • Building Construction

Create the following Vouchers using with Cost centers and Cost Categories

  1. Commission paid in cash Rs.25,000 (for executives) on 01/05/2021
    • For Salesman A – Rs. 10,000
    • For Salesman B – Rs. 10,000
    • For Salesman C – Rs. 5,000
  2. Maintenance expenses paid in cash – Rs. 50,000/- (For departments) on 02/05/2021
    1. For Marketing – Rs. 20,000
    2. For Manufacturing – Rs. 25,000
    3. For Financial Buildings – Rs. 5,000
  3. Labor charges paid in cash – Rs. 1,00,000/- (For Projects)
    1. For Airport construction
    2. For Building Construction
    3. For Roads Construction

SOLUTION

SETTING UP FEATURES

  • Press F11 for company features
    • Show more features : Yes
    • Show all features : Yes
    • Accounting :
      Enable cost centers : Yes
  • CTRL + A to accept the total screen

Creating COST CATEGORIES

  • Gateway of Tally
    • Masters
      • Create
        Click on SHOW MORE
        • Accounting Masters
          • Cost Category
            • Click on ‘Create New’ option
  • Cost Category:
    • Name : Departments
      Allocate Revenue Items : Yes
      Allocate Non – Revenue items : Yes
      Accept _ Yes
    • Name : Executives
      Allocate Revenue Items : Yes
      Allocate Non – Revenue Items : Yes
      Accept _ Yes
    • Name : Projects
      Allocate Revenue items : Yes
      Allocate Non – Revenue Items : Yes
      Accept _ Yes

Creating Cost Centers

  • Gateway of Tally
    • Masters
      • Create
        • Accounting Masters
          • Cost Center < Press enter>
  • Category :
    DEPARTMENTS <select from the list>
    Name :
    Marketing
    Under :
    Primary
    Press enter Accept _ Yes

    Name :
    Manufacturing
    Under :
    Primary
    Press enter Accept _ Yes

    Name :
    Financial Buildings
    Under :
    Primary
    Press enter Accept _ Yes
  • Press BACKSPACE to change the cost category
  • CATEGORY :
    Executives
    NAME :
    Sales Man A
    Under :
    Primary
    Accept _ Yes

    Name : Sales Man B
    Under : Primary
    Accept _ Yes

    Name : Sales Man C
    Under : Primary
    Accept _ Yes
  • Press Backspace to change category
  • Category :
    Projects
    Name :
    Airport Construction
    Under :
    Primary
    Accept _ Yes

    Name :
    Roads Construction
    Under :
    Primary
    Accept _ Yes

    Name :
    Buildings Construction
    Under :
    Primary
    Accept _ Yes

Creating Vouchers with Cost Centers & Categories

  • Gateway of Tally
    • Transactions
      • Vouchers
  • Press F5 for payment voucher
  • Press CTRL + H for change mode
  • Select “Single entry “
    Press enter
  • Press ALT + F2 to change period
    From : 01-04-2021
    To : 31-03-2022
  • Press F2 to change Date :
    01-05-2021
  • Now enter the transaction – 01
  • Account : Cash
  • Particulars :
    Select “Create” option , Press enter (or) Press ALT + C
    Press F12 for configuration in ledger creation screen
    Apply cost centers for ledgers : Yes
    Name : Commission
    Under : Indirect Expenses
    Cost Centers are applicable : Yes
    Press Enter
    Accept _ Yes
  • Amount :
    25,000
  • Cost Category :
    Select “Executives” from list < Press enter >
  • Cost Center :
    Sales Man A
    Amount : 10,000 < Press enter >
    Sales Man B
    Amount : 10,000 <press enter>
    Sales Man C
    Amount : 5,000 < Press enter>
  • End of list < Press enter >
  • Press enter > Accept _ Yes

REPORTS

  • Press ALT + G for GO TO and type the text “Cost Category Summary”
  • Press ALT + F1 for detailed report

READ MORE

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