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Cost Centres using Tally.ERP 9

INTRODUCTION

  1. Use of Cost Centres

  2. Creating a Single Cost Centre in Tally.ERP 9

  3. Displaying a Single Cost Centre

  4. Altering a Cost Centre in Tally.ERP 9

  5. Deleting a Cost Centre

  6. Creating Multiple Cost Centres in Tally.ERP 9

  7. Displaying Cost Centres in Multiple Mode

  8. Altering Cost Centres in Multiple Mode in Tally.ERP 9

  9. Creating Cost Centres under Cost Categories in Tally.ERP 9

  10. Creating Multiple Cost Centres under Cost Categories in Tally.ERP 9

INTRODUCTIONS @ Cost Center using Tally.ERP9

A Cost Centre is any unit of an organisation to which transactions (generally, revenue) can be allocated. When only costs or expenses are allocated to these units, they are referred to as Cost Centres. When profits are also allocated to these units, they become Profit Centres. You can now obtain a Profit and Loss account of each such Profit Centre.

Cost Centre in Tally.ERP 9 allows an additional dimension to a transaction where a Ledger account indicates the nature of the transaction. It does not readily disclose, except in the narration field, which part of the organisation was involved in the transaction.

With the help of Cost Centres, a transaction can be allocated to it, which would then enable accumulation of the all transactions for that particular Cost Centre. Tally.ERP 9 gives you the Cost Centre break-up of each transaction as well as details of transactions for each Cost Centre.

Some examples of Cost Centres are :

  • Departments of an organisation - Finance, Manufacturing, Marketing, and so on.

  • Products of a company.

  • Individuals such as Salesman A, Salesman B.

1.   Use of Cost Centres in Tally.ERP9

You can classify Cost Centres, just as how you classify Group/Ledger accounts. You can have Primary Cost Centres and several levels of Cost Centres under each Primary Cost Centre.

Consider the following example.

Primary Cost Centres - Finance, Manufacturing, Marketing.

Under Marketing, classify the company's sales executives as Cost Centres. This will help you track a sales executive's performance, in terms of cost and revenue generated.

You will then have the following Cost Centre structure

Primary Cost Centre - Marketing

Under Marketing:

  • Salesman A
  • Salesman B
  • Salesman C

Allocate expenditure incurred on sales by the salesmen, as well as the sales generated by them, directly to their Cost Centres. The allocation is done at the time of voucher entry. This prevents allocation errors at the end of the period.

By allocating expenses and sales transactions to the salesmen, you are setting up a valuable information system that tracks the performance of your salesmen.

2.    Creating a Single Cost Centre in Tally.ERP 9

To create a Cost Centre, set Maintain Cost Centres to Yes in F11: Accounting Features. For parallel allocation of Cost, you can set More than ONE Payroll/Cost Category to Yes.

By default, Tally.ERP 9 activates the Cost Centre feature for Ledger accounts under Sales Accounts, Purchase Accounts, Expense and Income groups.

Go to Gateway of Tally> Accounts Info.> Cost Centres> Create (Single Cost Centre)

The Cost Centre Creation screen is displayed as shown.

Creating a Single Cost Centre in Tally.ERP 9

A brief explanation on each of the fields in the Cost Centre Creation screen follows.

Name

Enter the name of the Cost Centre in this field. For example, Name, function, activity, department, task and so on.

alias

Enter an alternative name, if required. For example, a short name or a code number

Under

Select the parent Cost Centre under which the Cost Centre is grouped or created from the List of Cost Centres. If you want the Cost Centre to be a Primary Cost Centre, select Primary from the list.

Provide Bank Details?

The user can specify transaction details for a particular Cost Centre, then this option can be enabled and relevant details entered in the Bank Details screen. Set this option to No for the Cost Centre Accts.

E-Mail

If required, E-Mail ID can be specified in this field

Refer Creating Cost Centres for Job Costing for details on using Cost Centres for Job Costing.

Note: Unlike Groups, you can allocate transactions to Primary Cost Centres. However, you should do so when you do not have Sub Cost Centres under the Primary Cost Centre.

3.    Displaying a Single Cost Centre in Tally.ERP9

To display the details of Cost Centre masters

Go to Gateway of Tally > Accounts Info. > Cost Centres > Display (under Single Cost Centre)

The Cost Centre Display screen appears. It is not possible to make any modifications to the Cost Centre master in the Display mode. You can only view the details in this mode.

4.    Altering a Cost Centre in Tally.ERP 9

To alter an existing Cost Centre

Go to Gateway of Tally> Accounts Info.> Cost Centres> Alter (under Single Cost Centre)

The Cost Centre Alteration displays,

Altering a Cost Centre in Tally.ERP 9

Make the necessary changes and Accept to save.

5.    Deleting a Cost Centre in Tally.ERP9

You can delete a Cost Centre from the Cost Centre Alteration screen by pressing ALT+D.

You can delete a Cost Centre only if …

  • It does not have any Cost Centres created under it.

  • It is not used in any transactions.

6.    Creating Multiple Cost Centres in Tally.ERP 9

You can create multiple Cost Centres in this mode.

Go to Gateway of Tally> Accounts Info.> Cost Centres> Create (under Multiple Ledgers)

The Multi Cost Centre Creation screen is displayed as shown.

Creating Multiple Cost Centres in Tally.ERP 9

A brief explanation on each of the fields in the Multi Cost Centre Creation screen follows.

Under Cost Centre

Select a particular Cost Centre as the parent Cost Centre, to create cost centres under it. If you wish to create cost centres under different Cost Centres, select All Items and specify the relevant cost centres in the Under field.

Name of Cost Centre

Enter the name of the Cost Centre to be created.

Under

The Parent Cost Centre selected in the Under Cost Centre field displays automatically in the Under field for Cost Centres created newly. If All Items is selected in the Under Cost Centre field, you have the option of selecting the Cost Centre from the List of Cost Centres.

7. Displaying Cost Centres in Multiple Mode

You can display the details of multiple Cost Centres at a time in this mode.

Go to Gateway of Tally> Accounts Info.> Cost Centres> Display (under Multiple Cost Centres)

Select a Cost Centre or All Items to display the details of all the Cost Centres under it. Alteration of Cost Centres will not be possible in Display mode.

Note : The alias option will not be available in Multiple Cost Centre Creation mode. However, you can specify aliases to Cost Centres by selecting each cost centre.

8. Altering Cost Centres in Multiple Mode in Tally.ERP 9

You can alter multiple Cost Centres at a time in this mode.

Go to Gateway of Tally > Accounts Info.> Cost Centres > Alter (under Multiple Cost Centres)

Altering Cost Centres in Multiple Mode in Tally.ERP 9

Use <backspace> to move back to the field Under Cost Centre or use the button F4: Parent to change parent Cost Centre. Make the necessary changes in the respective fields and Accept to save.

Note: You cannot delete a Cost Centre in multiple mode

9. Creating Cost Centres under Cost Categories in Tally.ERP 9

To create a Cost Centre under a Cost Category, set More than ONE Payroll/Cost Category to Yes in F11: Accounting Features

Go to Gateway of Tally > Accounts Info. > Cost Centre > Create (under Single Cost Centres)

Creating Cost Centres under Cost Categories in Tally.ERP 9
Category

This field appears only when you have opted for More than ONE Payroll/Cost Category in F11: Features. Else, Tally.ERP 9 automatically creates a Primary Cost Category to which all cost centres are assigned.

All the other fields are described in detail in the section Creating Cost Centres in Single mode

Displaying and Altering Cost Centres under Cost Categories in Single mode is similar to Displaying and Altering Cost Centres in Single mode explained previously. The only additional field is Category.

10. Creating Multiple Cost Centres under Cost Categories in Tally.ERP 9

Go to Gateway of Tally> Accounts Info.> Cost Centres> Create (under Multiple Cost Centres)

Creating Multiple Cost Centres under Cost Categories in Tally.ERP 9

This is a quick way to create multiple cost centres under a single Cost Category at a time.

Under Cost Centre

Select a particular Cost Centre as the parent cost center, if you wish to create multiple cost centres under it.

Creating Multiple Cost Centres under Cost Categories in Tally.ERP 9

Category

Select the Category under which the Cost Centre will be created from the List of Categories or create a new category by pressing [Alt+C]

Name of Cost Centre

Enter the name of the new cost centre. The alias facility is not available in this mode. Select single alter to give aliases to Cost Centres created in multiple mode.

Under

Select the parent Cost Centre from the List of Cost Centres. The list displays only the Cost Centres that belong to the selected Category.

Displaying and Altering Cost Centres under Cost Categories in Multiple mode is similar to Displaying and Altering Cost Centres in Multiple mode explained in the respective chapters. The only additional field is Category.

 
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