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Is it possible to account By- Products/Co-Products or Scrap produced during manufactuer of Finished goods in Manufacturing Journal. If Yes, does it allow to approtion the cost to By- Products/Co-Products or Scrap? in Tally.ERP 9 ?

Query

Is it possible to account By- Products/Co-Products or Scrap produced during manufacturer of Finished Goods in Manufacturing Journal? If Yes, does it allow to apportion the cost to By- Products/Co-Products or Scrap?

Answer

Yes, it is possible to account the manufacture of By- Products/Co-Products or Scrap produced during manufacture of finished goods in Manufacturing Journal. This facility is available from Tally.ERP 9 Release 3.0.

Let us take the Manufacture of Sugar where Bagasse and Molasses are produced as By-Products.

Step 1: Creating Manufacturing Journal Voucher Type

In Tally.ERP 9, there is no default voucher type which can be used to account manufacture of finished goods. To record manufacture of Goods a new Voucher Type - Manufacturing Journal can be created under Stock Journal or the existing Stock Journal can be altered to use as manufacturing Journal

Here, let us create a new Voucher Type - Manufacturing Journal

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Step 2: Record the Manufacturing Journal

Go to Gateway of Tally > Inventory Vouchers > Alt + F7. In Change Voucher Type screen select Manufacturing Journal from the List of Types

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1. In the Name of Product field, select the product which needs to be manufactured from the List of Items. The Item selected in Name of Product field will be the primary Item which will be manufactured using different components.

2. In the BOM Name field, select the Bill of Material if you want the components utilised to manufacture the finished goods to be displayed automatically.

Note: In case BOM is selected the Components used for the manufacture of finished goods & the By-Products/Co-Products or Scrap produced during manufacturing will be defaulted.

3. In the Quantity field, enter the quantity of goods produced.

The % of Cost Allocation field displays the Percentage of Cost of Allocation to the Primary Item manufactured.

Note:

§       Note 1: In a manufacturing process if there are no by-Products/co-products or scrap produced then the % of Cost of Allocation to Primary Item will 100%

§       Note 2: If there are any by-products/Co-products or scrap is manufactured then the % of Cost of Allocation to primary item will be Total Cost - Cost allocated to By Products /Co Products /Scrap.

Under Components (Consumption), the list of Sub-Component items that will be used to produce the finished goods need to be selected.

4. In the Name of Item field, select the components used for the manufacture of finished goods.

5. In the Quantity field, mention the Quantity of Raw materials required to manufacture the finished goods.

6. In the Rate field, mention the rate (purchase cost) of the raw materials used in the manufacture of finished goods.

The Amount will be calculated automatically based on Quantity & Rate of item.

Under Co-Products/ By-Products /Scrap, the list of By-products/ Co-products or Scrap produced during the manufacture of finished goods need to be selected.

7. In the Name of Item field, select the By-product/Co-product/Scrap name which is produced in the process of manufacture of finished goods.

8. In the % of Cost Allocation field, specify the % of cost of allocation to be made towards the By-product/Co-product/Scrap produced.

9. In the Quantity field, mention the Quantity of By-product/Co-product/Scrap produced.

  • Rate: This is the rate of producing of By-product/Co-product/Scrap. (Rate = Amount/Quantity) Rate will be displayed automatically
  • Amount: Amount will be displayed automatically based on the % of Cost Allocation defined for the By-product/Co-product/Scrap produced. Tally.ERP 9 calculates the % of Cost Allocation on Effective Cost
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In the Example Amount of Bagasse (25,597.50) = 34,13,000 (Effective Cost) X 0.75\100 (% of Cost Allocation)

Cost of Components: This field displays the total cost of the components (raw materials) used in the manufacture of finished goods.

10. In the Type of Addl. Cost field, enter the additional cost incurred for manufacturing the finished goods, if any.

Total Addl. Cost: The total of all additional cost will be displayed here.

Effective Cost: The Effective cost is total of Cost of Components (Consumption) + Additional Cost incurred to manufacture the finished goods & Co-Product/By-product or Scrap

In the example 33,78,000 + 35,000 = 34,13,000 is incurred manufacture Sugar (Primary Item), Bagasse & Molasses

Allocation to Primary Item: The cost allocated to manufacture the Primary Item will be displayed in this field.

Allocation to Primary Item = Effective Cost - Total cost of Co-products/By-Products/Scrap

Effective Rate of Primary Item: This is the rate of the Primary Item Manufactured (finished item).

In the example 33,80,576.50/ 90 (Sugar produced) = 37,561.96

 
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