Set up Required for Cost Centre Classes

Before you select classes, it is advisable to create the cost centre structure. Hence, create your cost categories and cost centres before creating classes.

Draw out on paper the Classes required and indicate which cost centres will be affected for each class. For example, You might have the following structure:

Divisions

1. Export

2. Wholesale

3. Retail

   Departments -

4. Finance

5. Marketing

   Where Divisions and Departments are Cost Categories the others are cost centres.

   Now, you want to allocate sales to the following Cost Centre Classes:

6. Export - to allocate 100% of Export sales to the cost centre Export

7. Wholesale - to allocate 100% of wholesale sales to the cost centre Wholesale

8. Retail - to allocate 100% of retail sales to the cost centre Retail

   You also want to allocate all the sales to the Marketing Department

   You want to allocate Marketing Expenses pro-rata in the following manner :

   1. Export – 60%

   2. Wholesale – 25%

   3. Retail-15%

100% to Marketing Department

With this structure, let us now set up the classes.

Set up Cost Centre Classes

At the Gateway of Tally, select F11: Features > Accounting Features

Set Use Pre-defined Cost Centre Allocations during Entry to Yes

 

(The other options can remain as previously set and are not discussed here.)

You now bring up the Cost Centre Classes creation screen. Type in the Class names and select the Categories and the respective cost centres. Specify the percentage of allocation. After entry, your auto-cost allocation screen will appear as follows :

 

We have created the Cost Classes as Export, Wholesale, Retail and Marketing Expenses. Divisions and Departments are cost categories. Export, Wholesale and Retail are cost centres under Divisions. Marketing Group is a cost centre under Departments.

Although the names of the class and the cost centres are the same in the example, you need not have them with same names.