Cost Categories in Tally

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. Some of the examples of Cost Categories can be Regionwise or geographywise, Gradewise, Departmentwise 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 Centres. The following example illustrates the use of Cost Categories.

The Cost Centres such as Marketing, Finance and Manufacturing can now belong to a category – Departments.

  Creating Multiple Cost Categories

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

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.

  Creating a Single Cost Category

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.

Cost Categories in Tally
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