Allocation of Expenses in Tally|How to do ?

Old reader of the blog are well aware that sometimes ago, I have written about how to create item ledger with vat and excise and how to pass zero value entry  in  Tally which generally used for gift items or sales promotion.

For last 2-3 days, I was providing remote support through Team viewer  to one Tally user based at Doha – Qatar who was facing some problem to track additional cost like Custom Duty/ transportation /freight charges etc.

Tracking such expenses is necessary to decide your actual cost of purchase. So, Today I am writing about how to track additional cost of purchase using Tally.erp 9. This feature is having a bit limitation that is you can use it only if the additional cost was charged by the supplier of the goods within same bill. To track  additional cost charged by a third-party, you need to take help of a Tally Integrator. Let’ s see how to use this feature in Tally.


In many situations, more than one item  was purchased where the expense incurred is charged as a lump-sum amount. However, to give an effective cost including the expense to each of the items, additional costs of purchase option is used. This process is automated and allocation of the expense to stock item can be done on a predefined basis.

Note: These expenses posted using Additional cost on Purchase features, do not affect the relevant nominal ledger accounts but update the cost of the Stock Item, i.e., the additional costs incurred are updated without actually affecting accounting, only the stock value goes up.

Using Additional Cost of Purchase

Enabling Additional Costs of Purchase

In F11: Features (F2: Inventory Features) under Purchase Management, set Track additional costs of Purchase to Yes.


F11 inventory featu 150x150

Now create a new ledger or alter an existing ledger to track additional cost of  transportation expenses.

transportation expense ledger 150x150


Now, you need to alter the group of such expenses as displayed in the below screen.

Using Additional Cost of Purchase
The additional costs/ expenses incurred can be allocated to each item based on:

  • Quantity


  • Value

The following set-up activity is required to appropriate the additional costs:

  • Alter the Parent Group of the expense ledger accounts, e.g. Indirect Expenses. (Go to Gateway of Tally > Accounting Info > Groups >Alter > Direct Expenses).
  • You will find a new option – Method to Allocate when used in Purchase Invoice.
  • If you want to appropriate the ledger accounts under this group to stock items either by Quantity or value, you must select the respective option. For ex: Select Appropriation by Qty.

appropriation of expenses 150x150

Here we have just discussed how to set additional cost in Tally and to set Leger/Parent Group to give effect.I will write in future about how to pass a purchase entry to track additional cost. So, come back here else, subscribe to our newsletters and you will get it directly in your mail box when it will be published.

Meanwhile, if you like our tutorials on Tally.erp 9, than do not forget to follow us on Twitter and re tweet our post.

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