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Cost Categories and Cost Centres in Tally

Cost Categories and Cost Centres in Tally

The term “cost center” in Tally ERP 9 can refer to an organizational unit to which costs or expenses can be allocated during transactions, whereas the term “cost category” is used to accumulate costs or profits for parallel sets of cost centers.

Major categories of cost center

The two basic categories of cost centres are:-

  • Cost centres associated to manufacturing, or the locations where goods are made or processed An assembly area is an illustration of this.
  • Service-related cost centres are those where services are offered to other cost centres. The canteen or the personnel department can serve as the clearest illustration for our understanding.

The vouchers can be used to designate Cost Centers. For the ledger accounts used for voucher entry, activate the cost center.

Cost Centers Applied to Ledger Accounts
Cost centers should be applied to ledger accounts,

Activate the cost centre for the transportation account in the payment ledger, for instance.

Log in to the Tally Gateway and select Accounts Info > Ledgers. Create/Alter
Set the choice Yes, cost centres are applicable.

Cost Centre Allocation in Voucher Entry

The primary voucher entry screen’s pop-up sub-screens are where cost center allocations must be made. The amount fields for the ledger for which cost centers have been activated are presented following the sub-screen. The sub-screen for the ledger Conveyance A/c is therefore as follows.

Allocating costs and income to cost centres is the sole goal of cost centre creation.
The payment voucher entry page is provided after designating the Cost Centers.

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