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. For example, region-wise or geography-wise, Grade-wise, Department-wise, cost categories.
Using cost categories you can allocate, in parallel, a transaction to more than one set of cost centres.
For example,
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 Centres |
Marketing |
Salesman A |
Airport Construction |
Manufacturing |
Salesman B |
Road Construction |
|
Finance |
Salesman C |
Buildings |
You can specify a Cost Category to allow allocation of only revenue items or items of both revenue and capital (Non-Revenue) nature.
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.