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In Tally.ERP 9, the cost centre could refer to an organizational unit to which costs or expenses can be allocated during transactions while the cost category is used to accumulate costs or profits for parallel sets of cost centres.

Major categories of cost centre

There are two main types of cost centres

  • Cost centres related to production – where the products are manufactured or processed. Example of this is an assembly area.
  • Cost centres related to provision of services – where services are provided to other cost centres. A simplest example for our understanding could be personnel department or the canteen.

Cost Centers can be allocated in the vouchers. Activate Cost Centre for the Ledger Accounts that are used in voucher entry.

Applying Cost Centres to Ledger Accounts

To apply cost centres to ledger accounts,

For example, enable Cost Center for Payment ledger – conveyance account.

  • Go to Gateway of Tally > Accounts Info > Ledgers > Create/Alter
  • Set the option Cost centres are applicable to Yes.

Cost Centre Allocation in Voucher Entry

Cost Centre allocations have to be done in the pop-up sub-screens in the main voucher entry screen. The sub-screen is displayed after the amount fields pertaining to the ledger for which cost centers have been activated. Hence, the following is the sub-screen for the ledger Conveyance A/c.

The entire objective of creating Cost Centres is to allocate expenses and revenues to Cost Centres.
After allocating the Cost Centers, the payment voucher entry screen is displayed as shown.

Cost Categories and Cost Centres in Tally

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