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Cost Categories using Tally.ERP 9

1. Meaning and Concepts of Cost Categories

Cost Categories are useful for organisations that require allocation of Revenue and Non-Revenue Items to parallel sets of Cost Centres. Cost categories facilitate third dimensional reporting of Expenditure and revenue. Some of the examples of Cost Categories can be Regionwise or geographywise, Gradewise, Departmentwise and so on.

Use of Cost Categories

By using Cost Categories you may allocate, in parallel, a transaction to more than one set of Cost Centres. The following example illustrates the use of Cost Categories.

The Cost Centres such as Marketing, Finance and Manufacturing can now belong to a category - Departments.

The Salesmen A, B and C can be Cost Centres under a Category - Executives.

Similarly, you can create a new Cost Category Projects under which Cost Centres such as Airport construction, Road construction and Buildings may be created.

The classification appears as following:

Cost Categories Departments Executives Projects
Cost Centers Marketing Salesman A Airport Construction
Manufacturing Salesman B Raod Construction
Finance Salesman C Building

Specify a Cost Category to allow allocation of only revenue items or items of both revenue and capital (Non-Revenue) nature. Here in this instance, enable Revenue Items and Non-Revenue Items to Yes for Departments and Projects Categories and only Allow Revenue Items for Executives.

By allocating expenses to parallel Cost Centres under different categories, you are simply assigning the amounts to them; the amount does not increase. Tally.ERP 9 performs an automatic reconciliation on real-time basis, saving you the effort of reconciling Ledgers and Cost Centres.

Note: Transactions are not allocated to Cost Categories but to Cost Centres only.

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

To create a Cost Category, set Maintain Cost Centres to Yes in F11: Accounting Features and then set More than ONE Payroll/Cost Category to Yes.

Maintain Cost Centres to Yes in F11: Accounting Features
This option is by default, set to No. When this option is set to Yes, Tally.ERP 9 creates a single Cost Category called Primary Cost Category automatically and allows creation of Cost Centres under the Primary Cost Category. However, you may also create new Cost Categories or alter existing Cost Categories.

To create a Cost Category

Go to Gateway of Tally > Accounts Info. > Cost Categories > Create (under Single Cost Category)

The Cost Category Creation screen is displayed as shown.

Cost Category Creation screen
A brief description on each of the fields in the Cost Category Creation screen follows.

Name

Enter the name of the Cost Category.

Note: There is no sub-classification of Cost Categories and hence you do not find an Under option. Though, there is a Primary Cost Category, it is not a parent of other categories.

(alias)

Enter an alias, if you wish to call the Category by another name or even by a code number. This field displays only if you set Allow ADVANCED entries in Masters in Gateway of Tally >F12: Configure> Accts/Inv Info. to Yes.

Allocate Revenue Items

Set this option to Yes, to allocate all sales, purchase, expenses and income related transactions to Cost Centres created under this Cost Category. However, if you wish to allocate only capital/non-revenue items to Cost Centres created under this Cost Category, set this option to No.

Allocate Non-Revenue Items

Set this option to Yes, to allocate transactions related to capital or non-revenue nature to Cost Centres created under this Cost Category. By default, this option is set to No.

Note: Enable either Revenue or Non-Revenue items, or both. Do not disable both. Tally.ERP 9 sets Yes, by default, for Revenue items and No for Non-Revenue items.

3.    Displaying a Single Cost Category in Tally.ERP9

To view the details of the selected Cost Category masters from this mode

Go to Gateway of Tally> Accounts Info.> Cost Categories> Display (under Single Cost Category)

Select a Cost Category from the List of Categories. The Cost Category Display screen is displayed.

You cannot make any changes to the fields in the Display mode.

4.    Altering a Cost Category in Tally.ERP 9

To alter an existing Cost Category

Go to Gateway of Tally> Accounts Info.> Cost Categories> Alter (under Single Cost Category)

Select the Cost Category from the List of Categories. The Cost Category Alteration screen displays. Make the changes in the required fields and Accept to save.

5.    Deleting a Cost Category in Tally.ERP9

You may delete a Cost Category that does not have any cost centre under it from the Cost Category Alteration screen.

Use ALT+D to delete it.

Tally.ERP 9 does not allow deletion of a Cost Category that has Cost Centres.

6.    Creating Multiple Cost Categories in Tally.ERP 9

You can create multiple Cost Categories at a time using the multiple mode.
Go to Gateway of Tally > Accounts Info. > Cost Categories > Create (under Multiple Cost categories)

The Multi Cost Category Creation screen is displayed as shown:

Creating Multiple Cost Categories in Tally.ERP 9
An explanation on each of the fields in Multi Cost Category Creation screen follows.

S. No.

This is an auto-generated serial number.

Name of Category

Enter the name of the Cost Category.

Allocations for

The Allocations for column is divided into two options, Revenue Items and Non-Revenue Items.

Revenue Items

This is set to Yes, by default. However, you have the option of altering it. This denotes whether you want to allocate revenue items to Cost Centres created under the Cost Category.

Non-revenue Items

This option is set to No, by default. You can set it to Yes, if you wish to allocate Non-Revenue or Capital items to Cost Centres created under the Cost Category.
Note: There is no Under field as you cannot sub-classify Cost Categories. Cost Categories have Cost Centres as their sub-classification.

7.    Displaying Cost Categories in multiple mode in Tally.ERP9

You can display multiple Cost Categories at a time in this mode. To display Cost Categories in the multiple mode

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

The Multi Cost Category Display screen is displayed. View the details of all the Cost Categories created. It is not possible to make any changes in display mode.

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

You can alter multiple Cost Categories at a time in this mode. To alter Cost Categories in the multiple mode

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

The Multi Cost Category Alteration screen displays. Make the necessary changes and Accept to save.

Altering Cost Categories in Multiple Mode in Tally.ERP 9
Note: You will not be able to delete a Cost Category in multiple mode.

 
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