Procurement of Materials with Job Costing in TallyPrime + Example

Procurement of materials with job costing in TallyPrime involves tracking the cost of materials used in specific jobs or projects.

This helps you understand the profitability of each job and make informed business decisions.

1. Key Steps for Procurement of Materials with Job Costing in TallyPrime:

1. Create Job Costing Ledgers:

Create separate ledger accounts for various cost elements associated with job work, such as:

• Raw Materials
• Direct Labor
• Overhead Costs
• Work in Progress
• Finished Goods

2. Enable Cost Tracking:

Ensure that “Enable Cost Tracking” is set to “Yes” under Inventory Features in TallyPrime.

3. Create Cost Tracking Numbers:

Create unique cost tracking numbers for different job work orders.

4. Purchase Materials:

• Create purchase orders for the required materials.
• Link the purchase orders to the relevant cost tracking numbers.
• Receive materials and record them using material receipt vouchers.

5. Issue Materials to Production:

Use the “Material Out (FG)” voucher to transfer materials to the production floor.

Link this to the corresponding cost tracking number.

6. Record Finished Goods:

Use the “Manufacturing Journal” to record the production of finished goods, consuming the raw materials and generating the final product.

Link this to the cost tracking number.

2. Example: Furniture Manufacturer of Custom Sofa Order

Let’s say you’re a furniture manufacturer and you’re working on a custom sofa order.

1. Create Ledgers: Create ledgers for “Wood,” “Fabric,” “Labor,” “Overhead,” “Work in Progress,” and “Sofa (Finished Goods)”.
2. Enable Cost Tracking: Ensure it’s enabled.
3. Create Cost Tracking Number: Create a cost tracking number like “SofaOrder1”.
4. Purchase Materials: Purchase wood, fabric, and other components. Link the purchase orders to “SofaOrder1”.
5. Issue Materials: Transfer the materials to the production floor using “Material Out (FG)” vouchers, linking them to “SofaOrder1”.
6. Record Production: Use the “Manufacturing Journal” to record the production of the sofa, consuming the materials and generating the finished product. Link it to “SofaOrder1”.

3. Analyzing Job Costs in TallyPrime:

• Use the Stock Item Cost Analysis report to analyze the cost of materials used in the job.
• Use the Job Orders Summary report to track the overall cost of the job work order.
• Analyze the Components Order Summary to see the consumption of materials.

By following these steps and using TallyPrime’s reporting features, you can effectively track the cost of materials used in your job work orders and make informed business decisions.