Lesson-34 Cost Categories

Cost Categories are useful for organizations that require allocation of Revenue and Non-Revenue Items to parallel sets of Cost Centers. Cost categories facilitate third dimensional reporting of Expenditure and revenue. Some of the examples of Cost Categories can be Region wise or geography wise, Grade wise, Department wise 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 Centers. The following example illustrates the use of Cost Categories.

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

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

Similarly, you can create a new Cost Category Projects under which Cost Centers 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	Road Construction
	Finance	Salesman C	Building

Specify a Cost Categoryto 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 Centers 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 Centers.

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

 

Creating a Single Cost Category

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

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.

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 Underoption. 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 Centers created under this Cost Category. However, if you wish to allocate only capital/non-revenue items to Cost Centers 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 Centers 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.

Displaying a Single Cost Category

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.

Altering a Cost Category

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.

Deleting a Cost Category

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 Centers.

Buttons in Single Cost Category screens

Groups, Ledgers, Cost Center, Vch Types

It enables you to switch to these areas without having to quit from the current screen.

F11: Features

To change company features. A detailed explanation on features has been given in the earlier section under Gateway of Tally.

Note: F12: Configuration changes affect all companies, whereas F11: Features changes affect only the current company.

Creating Multiple Cost Categories

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:

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 Centers 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 Centers created under the Cost Category.

Note: There is no Under field as you cannot sub-classify Cost Categories. Cost Categories have Cost Centers as their sub-classification.

 

Displaying Cost Categories in multiple mode

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.

Altering Cost Categories in Multiple mode

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.

Note: You will not be able to delete a Cost Category in multiple mode.

 

Buttons in Single Multiple Cost Category screens

F6: Skip names

It is used for quicker data entry when you need to alter only the Allocation details and not the names of the Cost Categories.

F8: Skip Details

It is used for faster data entry when you do not need to alter the Allocation (Revenue and Non- revenue) details. You need to give only the names and the default allocations of Yes for Revenue and No for Non-revenue display automatically when you are creating Cost Categories. If you are in Alter mode, the allocations that you opted for when creating the Categories are retained.

Groups, Ledgers, Cst Ctr

It enables you to switch to these areas, without having to quit from the current screen.

F11: Features

It is used to change company features.  For more information refer F11: Features in Tally.ERP 9.

Note: F12: Configuration changes affect all companies, whereas F11: Features changes affect only the current company.

Creating Cost Centres under Cost Categories

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

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

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 Categoryto which all cost centres are assigned.

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

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

Creating Multiple Cost Centers under Cost Categories

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

This is a quick way to create multiple cost centers 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 centers under it.

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.

 

Error in Categorisation of Cost Centres:

PARENT BELONGS TO ANOTHER CATEGORY!

This error occurs when you try to assign a cost centre to a parent cost centre belonging to a different category. In most places, Tally.ERP 9 prevents you from making this error, by not displaying a cost centre belonging to a different category.

However, this action is not possible when you are altering a cost centre in multiple mode, selecting All Items in Under Cost Centre field. (You may have chosen to skip either or both).

You would have changed the Category without changing the name and the parent. However, Tally.ERP 9 will prompt for this error only at the time of accepting the screen.

Lesson 33-Cost Centres

A Cost Centreis any unit of an organization to which transactions (generally, revenue) can be allocated. When only costs or expenses are allocated to these units, they are referred to as Cost Centers. When profits are also allocated to these units, they become Profit Centers. 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 organization was involved in the transaction.

With the help of Cost Centers, 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 Centers are

·         Departments of an organization - Finance, Manufacturing, Marketing, and so on.

·         Products of a company.

·         Individuals such as Salesman A, Salesman B.

Use of Cost Centers

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

Consider the following example.

Primary Cost Centers - Finance, Manufacturing, Marketing.

Under Marketing, classify the company's sales executives as Cost Centers. 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 Centers. 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.

Creating a Single Cost Centre

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, Expenseand Incomegroups.

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

The Cost Centre Creationscreen is displayed as shown.

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 alternativename, 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.

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.

Displaying a Single Cost Centre

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.

Altering a Cost Centre

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, 

Make the necessary changes and Accept to save.

Deleting a Cost Centre

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.

 

Explanation of Buttons for Cost Centres in Single Mode

Groups, Ledgers, Voucher Types

It enables you to switch to these areas without having to quit from the current screen.

F11: Features

To change company features. For more information refer F11: Features in Tally.ERP 9.

F12: Configure

To change the configuration of master information. For more information refer F12: Configurations in Tally.ERP 9.

Note: F12: Configurationchanges affect all companies in the data directory, whereas F11: Featureschanges affect the current company only.

Creating Multiple Cost Centers

You can create multiple Cost Centers in this mode.

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

The Multi Cost Centre Creation screen is displayed as shown.

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 theparent Cost Centre, to create cost centers under it. If you wish to create cost centers under different Cost Centers, select All Items and specify the relevant cost centers 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 theUnder Cost Centre field displays automatically in the Under field for Cost Centers 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 Centers.

Displaying Cost Centers in Multiple Mode

You can display the details of multiple Cost Centers at a time in this mode. Go to Gateway of Tally> Accounts Info.> Cost Centers> Display (under Multiple Cost Centers). Select a Cost Centre or All Items to display the details of all the Cost Centers under it. Alteration of Cost Centers 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 aliasesto Cost Centers by selecting each cost centre.

  

Altering Cost Centers in Multiple Mode

You can alter multiple Cost Centers at a time in this mode. Go to Gateway of Tally > Accounts Info.> Cost Centers > Alter (under Multiple Cost Centers)

Use 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.

 

Explanation on Buttons in Multiple Mode

F4: Parent

It is used to move the cursor to the field Under Cost Centre.

 

Ctrl + F4: New Parent

It is used to bring up the list of Cost Centres, to select a new parent Cost Centre.

 

F6: Skip Name/Edit Name

It is used for faster data entry when you need to alter only the Category and the Parent Cost Centre, but not the names. While skipping names, you might change the Category or the parent Cost Centre to one, which belongs to another Category, in such instances Tally.ERP 9 displays an error message at the time of accepting the screen.

 

F7: Skip Parent/Edit Parent

It is used for quicker data entry, when you do not need to alter the parent Cost Centres but only the name of the Cost Centre. While skipping Parent Cost Centres, you might change the Category or the Cost Centres names, in such instances Tally.ERP 9 displays an error message at the time of accepting the screen.

 

Groups, Ledgers, Cst Cat:

It enables you to switch to these areas without having to quit from the current screen.

 

F11: Features:

To change Company features. Press F11: Features in Tally.ERP 9.

Lesson-32 Job Order

Job Work Out Order

When the principal company intents to manufacture or process goods, raises a Job Work Out Order on Job Worker to process the order.  The Job Work Out order contains the Ordered Item, Quantity, Rate and the Amount. It allows to define the BoM for the ordered item. It also contains the despatch details, the process instruction with regard to duration and nature of process along with the Job Work Out Order Number.

Tally.ERP 9 allows the principal company to have track of raw materials sent and finished/processed materials received. It provides reports on Orders/Components Outstandings, Material Movements,  Stock availability with Job Workers, Stock ageing analysis and Analysis on Job Work such as Issue and Receipt Variance.  

 

Job Work In Order

When the job worker receives an order from the principal company to manufacture or process goods, raises a Job Work In Order on the Job Order received. The Job Work In order contains the Ordered Item, Quantity, Rate and the Amount. It allows to define the BoM for the ordered item. It also contains the despatch details, the process instruction with regard to duration and nature of process along with the Job Work In Order Number.

Tally.ERP 9 allows the job worker have track of raw materials received and finished/processed materials sent. It provides reports on Orders/Components Oustandings, Material Movements,  Stock availability with Job Workers, Stock ageing analysis and Analysis on Job Work such as Issue and Receipt Variance.  

Creating a Job Work Out Order

This voucher allows the principal company to raise Job Orders on Job Worker. 

Party's A/c Name

Select the Supplier’s (Job Worker) name from the List of Ledger Accounts. Use Alt + Cto create a new account.

The Party Details screen is displayed. Provide the details as shown.

Order No

Enter the Job Work Out Order Number under Order No column.

Name of the Item

Select the StockItem for which order is placed, from the List of Stock Items. The Item Allocationssub-screen is displayed. Enter the details as shown.

Track Components

Set the option to Yesif components need to be tracked.

Due On

Enter the duedate for receipt of the items. This monitors outstanding receipts.

If orders are split for different dates, then specify the due date for the first lot to be received, after selecting the quantity, rate and amount; specify the due date for the second lot and so on. After specifying the due dates for all the lots, press Enter in the Due on field to return to the Voucher Creation screen.

Godown

Select the required Godown from the list.

Note: The Godownselected in Item Allocationshould not be enabled with options Our Stock with Third Partyand Third Party Stock with us in Godown masters.

Quantity, Rate and Amount

Enter the ordered quantity of the item and its rate. The amount will be calculated automatically.

In case Track Component is set to Yes, the Component Allocation screen is displayed when the Quantityis entered, as shown:

Note: The Components Allocation displays the list of components specified in the Ordered Item master.

·         Accept to Save.

Narration

This field is optional. Enter the required particulars concerning the order.

Altering and Deleting a Job Work Out Order

To alter a Job Work Out Order,

Go to Gateway of Tally > Display > Day Book or Go to Gateway of Tally > Display > Job Work Out Reports > Job Work Registers >Job

Work Out Orders Book

Make the necessary alterations and save.

Deleting a Job Work Out Order

To delete a Job Work Out Order, press Alt + D in the Job Work Out Order alteration screen.

Creating a Job Work In Order

This voucher allows the Job Worker to raise receipt of Job Order from the Principal Company.

Creating a Job Work In Order  

To create a Job Work In Order,

Go to Gateway of Tally > Order Vouchers > press Alt + W or click on W: Job Work In Order.

Party's A/c Name

Select the Customer's (Principal Company) name from the List of Ledger Accounts. Use Alt + C to create a new account.

The Party Detailsscreen is displayed. Provide the details as shown in Job Work Out Order.

Order No

Enter the Job Work In Order Number under Order No column.

Name of the Item

Select the StockItem for which order is received, from the List of Stock Items. The Item Allocationssub-screen is displayed. Enter the details as shown.

Due On

Enter the duedate for delivery of the items. This monitors outstanding deliverables.

If orders are split for different dates, then specify the due date for the first lot to be delivered, after selecting the quantity, rate and amount; specify the due date for the second lot and so on. After specifying the due dates for all the lots, press Enter in the Due on field to return to the Voucher Creation screen.

Godown

Select the required Godown from the list.

Note: The Godownselected should not be enabled with options Our Stock with Third Party and Third Party Stock with us in Godown masters.

Quantity, Rate and Amount

Enter the ordered quantity of the item.

In case Track Component is set to Yes, the Component Allocation screen is displayed when the Quantityis entered, as shown:

Note: The Components Allocation displays the list of components specified in the Ordered Item master

.

·         Accept to Save.

Narration

This field is optional. Enter the required particulars concerning the order.

Altering and Deleting a Job Work In Order

To alter a Job Work In Order,

Go to Gateway of Tally > Display > Day Book or Go to Gateway of Tally->Display->Job Work In Reports-> Job Work Registers->Job

Job Work In Orders Book

Make the necessary alterations and save.

Deleting a Job Work In Order

To delete a Job Work In Order, press Alt + D in the Job Work In Order alteration screen.