August 7, 2019
As Tally users, are we aware that, Tally.ERP9 can help you easily allocate costs to each of our organizational units whether a department or an employee etc. and effortlessly analyze the financial inflow or outflow of all these units?
Tally is one of the most powerful accounting software that helps in the allocation of various costs to each and every unit of the organization. The Cost Centre feature of Tally can also be used to track revenue and costs according to different dimensions such as Salesperson, Employee, Department, Purchase Invoice, Fixed Assets, etc. The tool can also help the organization analyze the commercial flow of each and every Cost Centre.
A cost Centre is any unit of an organization to which transactions can be allocated. When only costs or expenses are allocated to these units, they are referred to as Cost Centres. Transactions are allocated to cost Centres. Users can view the cost Centre break up of each transaction as well as the details of transactions for each Cost Centre.
The cost Centre & cost category feature of Tally.ERP9 can help users handle and manage multiple business units and analyze reports for the economic betterment of the organization. This can also help in profit optimization and quick decision making.
To enable Cost Centres and Cost Category
Step 1: Click on Gateway of Tally (GOT) > Click F11: Features > Accounting Features
Step 2: Users need to enable the option to Maintain Cost Centres
Step 3: Users need to enable the option to Maintain more than one Payroll or Cost Category
To enable Cost Centres in Tally.ERP9
Primarily, to create the Cost Centre to which the costs can be allocated. Following are the steps to create a Cost Centre;
Step 1: Go to Gateway of Tally.ERP9 > Click on Accounts Info.
Step 2: Click Cost Centres > Select “Create” under Single Cost Centres.
Step 3: Select the Cost Category under which the user needs to classify the Cost Centre.
Step 4: Go to Gateway of Tally (GOT) > Click on Accounts Info. > Click on Cost Categories
Step 5: Select “Create” under Single Cost Category
Step 6: Enter Cost Category name and accept the screen.
To enable allocation of expenses to Cost Centre
Prioritization needs to be made while the allocation of expenses to each Cost Centres while making the payment, the expense ledger needs to be created in Accounting Vouchers section followed by the passing of entry for the payment transaction.
Step 1: Go to Gateway of Tally (GOT) > Click on Accounting Vouchers > Click F5: Payment
Step 2: Users need to Debit the expense ledger with the required amount
Step 3: Click on the “Enter” button to open “Cost Allocation” screen
Step 4: Select the “Cost Category”
Step 5: Allocate each of the Cost Centre created with the required amount
Step 6: Users to Credit Bank or Cash to complete the payment transaction
To enable Cost Centre Reporting in Tally.ERP9
Tally.ERP9 provides reports to show complete details of all the Cost Centres and their related transactions. These reports are;
Category Summary: The Cost Category Summary shows the information on all the Cost Categories for which users have allocated the voucher transactions.
Step 1: Go to Gateway of Tally (GOT) > Click on Display > Click on Statement of Accounts > Click on Cost Centres.
Cost Centre Break-up: Cost Centre Break up displays the ledger accounts that are used in vouchers, the cost Centre they were allocated to, their total transaction values and the balance.
Step 1: Go to Gateway of Tally > Click on Display > Click on Statement of Accounts > Click on Cost Centres > Click on Cost Centre Break-up
Step 2: Select a Cost Centre
Step 3: Click F1: Detailed to see the ledgers
Ledger Break-up: Users can access the Ledger break up of the screen as follows;
Step 1: Go to Gateway of Tally > Click on Display > Click on Statement of Accounts > Click on Cost Centres > Click on Ledger Break up
Step 2: Select a ledger account for which the Cost Ledger Break up has to be viewed.
Group Break-up: The Group break up of Cost Centre gives you another view of a Cost Centre report by enabling you to analyze the distribution of a group of ledger accounts across different Cost Centres.
Step 1: Go to Gateway of Tally (GOT) > Click on Display > Click on Statement of Accounts > Click on Cost Centres > Click on Group Break up
Step 2: Select a group account
Step 3: The concerned group account allocated to different Cost Centres under different Cost Categories will be displayed.
If you are using Tally along with BI tools like EasyReports, you can easily fetch information and prepare reports without any hassle.
EasyReports offers comprehensive cost Centre reporting such as:
- Monthly Analysis of Cost Centre
- Multi-level cost Centre reports
- Exception Reports where expenses not entered with required cost Centre details
- Cost Centre wise ledger breakup with all cost Centres and ledgers in one report
- Ledger wise cost Centre breakup with all cost Centres and ledgers in one report
- Cost allocation reports
- Cost Centre P&L
- Opening balance tracking with cost Centres