Lesson-34 Cost Categories

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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 Category
to 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 Yes
in 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 Under
option. 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)
ยท        
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
Yes
in 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 Category
to 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 Centers
under 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

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.
Latest Comments
  1. Microtech Computer Institute

    nice info but usage not given.

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