Cost Centres & Cost Categories - FAQ

Currently, Tally.ERP 9 does not have an option to provide the breakup of opening balance to the cost centres. However, as an interim solution, you can provide the opening balance as per the procedure shown below:

Let us take an example of Salary Advance account having an opening balance of Rs.5,000 consisting of Cost Centres, namely, Employee A Rs.3,000 and Employee B Rs. 2,000.

1. Alter the ledger Salary Advance and remove the opening balance of Rs.5,000 as shown below:

2. Save the ledger.

3. Create another ledger Salary Advance Adjustment account under Loans & Advances .

4. Set No to Cost Centres are applicable? .

5. Enter Opening Balance as Rs.5,000/-

6. Save the ledger.

7. Pass a journal entry.

8. Debit Salary Advance Account with Cost Centre breakups and Credit Salary Advance Adjustment Account as shown below:

9. The Cost Centre Summary report displays the opening balance as shown below:

Cost Centres in Tally.ERP 9 enables you to analyse a particular transaction from multiple angles. It reduces the need for creating more ledgers for the purpose of gathering information for analysis.

Cost Centre could generally be a unit/ division/or department in the organization. You can allocate your expenses or revenues to each cost centre and extract reports for that cost centre. Tally.ERP 9 also allows you to compare one cost center with another.

The management is able to measure performance of each cost centre, based on these reports.

1. Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Cost Centre Break-up

2. Select a cost centre.

3. Use New Column (Alt+C) option to bring up the data of another cost centre for comparison alongside.

Using Cost Category Summary

While you are entering your sales transaction, you can allocate it over the sales executives who are responsible for the sale. This re-allocation of information does not duplicate the values in the ledgers. Tally.ERP 9 captures this information in a sales cost centre, purely for analysis.

In the above report, for example, each of the sales executives is treated as a cost centre which can be created under the Cost Category - Sales. Revenues and expenses are allocated accordingly during voucher entry. This helps you to compare and analyse their performance both with regard to sales and also their expense to income effectiveness. In the same manner, you can create cost centres under Cost Categories and allocate your transactions as per your requirements and analyse it for better business control.

Go to Gateway of Tally > Display > Statements of Accounts > Cost centres > Category Summary .

In Cost Centre alteration screen, if the option Use as Employee is enabled, then such cost centres will not appear while recording journal/receipt/payment transactions.

For example, a cost centre by name Employee 3 is not listed under Cost Centre Class.

Solution

In Journal/Receipt/Payment voucher, press F12 and enable the option Show Employee Details in Auto Cost List .

Now, the Cost Centre which is used as an Employee (Employee3) will displayed in the list as shown below:

This message is displayed when the number of decimals for Rate of Exchange is different at locations (Server/Client).

Solution

To synchronise the data, you need to maintain same number of decimals for currencies at all locations.

For example: At head office the specified rate for currency UAE Dirhams would be 5.4751 and at branch office the same would be 5.47. Currently, you have to maintain it as 5.4751 at branch office or vice versa.

If Data consist of entries which includes cost centres, but in the current financial year suppose cost centre details are not required, then how to disable the same in F11: Accounting features.

Answer

Take back up, in the current financial year, then set Cost centers are applicable to No by altering the individual ledgers and pass the entries. In case you want to view the cost center details of previous financial year, you can view the same in Cost centre breakup report, but only the values. If you want to view the transactions also, then check the Group Break up report for details.

Similar cost centres are created under different categories. The Cost Centre named A is created under Primary Cost Category at the exporting end and a similar Cost centre is categorized under Secondary Cost Category at the importing end.

At the importing end re-categorize cost centre named A under Primary Cost Category and import the vouchers.

Assign expenses or purchases to cost centres.

If payment entry is made for Expenses only,

1. Go to Gateway of Tally > Display > Accounts Books > Ledger .

2. Select Cash or Bank ledger

3. Click F12:Configure .

4. Set Show Cost Center Details also to Yes .

5. Press Enter to save.

If payment is made for Purchases (Inventory),

1. Go to Gateway of Tally > Display > Accounts Books > Ledger .

2. Select a Purchase Ledger.

3. Click F12:Configure .

4. Set Show Cost Center Details to Yes .

5. Set Show Inventory Details also to Yes .

6. Press Enter to save.

The predefined cost centre classes will not be available or imported to the new company automatically. They have to be created once again in the new company.

No. It is not possible to view Cost Centre details in Balance Sheet and Profit & Loss A/c.

View cost centre details from Ledger Voucher report.

1. Drill down to the Voucher report of the report.

2. Click F12: Range .

3. Set the following parameters: Voucher > having > Cost Centers > with > Name > containing > mention the cost centre name or part of the name.

4. Check the cost centre report.

Note: When applying a range of information in any report, Voucher will be available only when the report contains vouchers. Hence, it is important to drill down to Voucher report.

No, it is not possible to create a Sub Cost Category under another Cost Category.

Cost Centre allocation cannot be done in Receipt Note, but Cost Centres can be used in Delivery Note.

Identifying a suitable cost centre is very important for the control of cost. Cost centres may be classified into seven types:

● Productive Cost Centre : These cost centres are actually engaged in making the products, the raw materials are handled here and converted into salable products. In such centres both direct and indirect costs are incurred. For example, machine shops, welding shops, assembly shops are centres of an engineering factories.

● Service or Unproductive centres : These centres do not make the product but are essential aids to the productive centres. For example, power house, gas production shop, material services centres, plant maintenance centres.

● Mixed cost centres : These centres are engaged on productive and other lines on service works. For example, a tool shop services as a productive cost centre when it manufactures dyes and jigs for specific orders but functions as a servicing cost centre when it does repairs for the factory.

● Personal cost centres : It consisting of a person or a group of people such as a factory manager, sales manager, etc.

● Impersonal cost centre : It consisting of a department plant ot items of equipment (or group of these) such as machine shop, etc.

● Operation cost centre : The cost centre constitutes of machines and /or people which carry out the same operation.

● Process cost centres : A cost centre that consists of a continuous sequence of operations.

This error occurs while importing data into Tally.ERP 9. The Cost centre is created under Primary Cost Category at one end and this name is altered to a different name at the other end.

1. Have similar cost category names at both the ends or create a new Cost Category with the same name and ensure you have the respective cost centre under each cost category.

2. You may then proceed to import the data.