Why Use Cost Centers & Categories?
Cost Centers let you allocate amounts to departments, projects, or branches. Cost Categories allow parallel classification—e.g., allocate the same expense by Department and also by Project at the same time, for rich multi-dimensional reporting.
- See profitability by Project, Branch, or Salesperson.
- Control budgets and approvals department-wise.
- Combine with GST & Inventory for complete visibility.
Step 1 — Enable Cost Centers in TallyPrime
- Press F11 (Features) → Cost/Profit Centres Management → Yes for Enable Cost Centres.
- Set More than one Cost Category = Yes to use multiple categories in parallel.
- Optional: Enable Cost Centre Class for auto allocation templates.
You can enable this any time. Existing vouchers can be altered to add allocations later.
Step 2 — Create Cost Categories Dimension
- Gateway → Create → Cost Category.
- Examples: Department, Project, Branches.
- Keep names short for clean voucher screens.
Step 3 — Create Cost Centers Members
- Gateway → Create → Cost Centre.
- Choose the Cost Category this center belongs to.
- Examples: Dept → Marketing, Sales, HR; Project → Project-A, Project-B.
Step 4 — Allocate Costs in Vouchers Posting
Expenses / Purchases
- While entering a Payment or Journal, after the expense ledger amount, Tally prompts for Cost Allocations.
- Select Category → pick Cost Centre → enter Amount or %.
- Split across multiple centers (e.g., Marketing 60%, Sales 40%).
Incomes / Sales
- Allocate revenue to cost centers for profitability by project/branch.
- Useful when sales teams or branches earn commission-based revenue.
| Scenario | Category | Centers | Allocation |
|---|---|---|---|
| Ad Spend ₹1,00,000 | Department | Marketing, Sales | ₹60,000 / ₹40,000 |
| Consulting Income ₹2,50,000 | Project | Project-A, Project-B | ₹1,50,000 / ₹1,00,000 |
| Rent ₹50,000 | Branches | Hyderabad, Vizag | 50% / 50% |
Step 5 — Reports You’ll Use
| Report | Path | What It Shows | Action |
|---|---|---|---|
| Cost Centre Break-up | Display → Statements of Accounts → Cost Centres | Ledger-wise amounts by cost center | Drill down to vouchers; export to Excel |
| Category Summary | Display → Statements of Accounts → Cost Categories | Totals across all centers in a category | Compare departments vs months |
| Ledger Cost Allocation | Display → Account Books → Ledger | Cost allocations within a ledger | Helps audit and corrections |
| Profit by Project/Branch | Display → Cost Centres → Select Centre | Income − Expenses for that center | Use date filters & budgets |
Use Alt + P to print/email and Alt + E to export (PDF/Excel/JSON).
Step 6 — Budgets by Cost Centre (Optional)
- Enable Budgets in Features → Create a Budget by Ledger/Group and assign to Cost Centres.
- Compare Actual vs Budget in cost reports for control.
Step 7 — Cost Centre Classes (Auto Allocation)
- Create Cost Centre Class to pre-define split rules (e.g., Rent 50/50 across branches).
- Select the class in vouchers to apply allocation automatically.
Best Practices
- Keep Category = dimension (Department, Project, Branch); keep Center = member (Sales, Project-A, Vizag).
- Allocate both income & expense to get true profitability by center.
- Lock fiscal period after monthly close; avoid backdated edits that break allocations.
- Use consistent narrations (e.g., “Marketing Q2 campaign”).
- Audit reports quarterly; merge/disable unused centers to keep lists clean.
Troubleshooting (Common Issues & Fixes)
| Issue | Cause | Quick Fix |
|---|---|---|
| No allocation prompt in vouchers | Cost Centres not enabled / ledger not set to track | Enable feature; ensure ledger prompts for allocation |
| Can’t choose multiple centers | Single category mode | Turn on More than one Cost Category in Features |
| Report totals don’t match P&L | Some vouchers not allocated | Run ledger-wise view and allocate missing entries |
| Wrong center under wrong dimension | Created in incorrect category | Alter cost centre: move to correct category |
Handy Shortcuts
- Alt + G — Go To (search any report/master)
- Alt + C — Create cost centre/category on the fly
- Ctrl + A — Accept/save
- Alt + P — Print/email • Alt + E — Export