Allocating Expenses and Revenues to Cost Centers in Tally Prime

Tally Prime enables businesses to allocate expenses and revenues to specific cost centers, providing clear insights into their financial performance. This guide explains the step-by-step process with a real-life example.

Step 1: Enable Cost Centers

1. Open Tally Prime.
2. Go to Gateway of Tally.
3. Navigate to F11: Features.
4. Under Accounting Features, set Maintain Cost Centers to Yes.
5. Press Ctrl+A to save the settings.

Step 2: Create Cost Centers

Let’s create cost centers to allocate expenses and revenues:

1. Go to Gateway of Tally.
2. Select Create under Cost Centers.
3. Enter the name of the cost center, e.g., Marketing.
4. Specify if it is a primary or a sub-cost center. For this example, choose Primary.
5. Press Ctrl+A to save.

Step 3: Record an Expense Allocation

Now, let’s allocate an expense to the Marketing cost center:

1. Go to Gateway of Tally.
2. Select Accounting Vouchers.
3. Choose Payment Voucher.
4. Enter the payment details:
   • Ledger: Advertisement Expenses.
   • Amount: 50,000.
   • Narration: Advertisement expense for Marketing Campaign.
5. In the Cost Allocations screen, select the Marketing cost center and allocate the full amount.
6. Press Ctrl+A to save the voucher.

Step 4: Record a Revenue Allocation

Similarly, let’s allocate revenue to a cost center:

1. Go to Accounting Vouchers.
2. Select Receipt Voucher.
3. Enter the receipt details:
   • Ledger: Sales.
   • Amount: 1,00,000.
   • Narration: Revenue from Product Launch Event.
4. In the Cost Allocations screen, select the Marketing cost center and allocate the full amount.
5. Press Ctrl+A to save the voucher.

Step 5: View Cost Center Reports

To analyze the allocations, follow these steps:

1. Go to Gateway of Tally.
2. Select Display More Reports.
3. Choose Cost Center under Statements of Accounts.
4. Select the desired cost center, e.g., Marketing.
5. View the report showing allocated expenses and revenues for the cost center.

Example

For example, a company allocated a ₹50,000 advertisement expense and ₹1,00,000 revenue from a product launch event to the Marketing cost center. By analyzing the cost center report, the company can evaluate the profitability and performance of its marketing activities.

Conclusion

Allocating expenses and revenues to cost centers in Tally Prime simplifies tracking and enhances financial decision-making. This feature is essential for businesses looking to analyze their operational efficiency and profitability.