Materials Manufacturing Accounts in Tally

Products Manufacturing Accounts in Tally

In Trading Business, the Items bought are sold in the same state. In Manufacturing, Items bought (Raw Materials) are consumed to produce the Finished Products. The Finished Goods produced are then sold. So, the Items bought (Raw Materials & components) are different from Items sold (Finished Product).

Now we explain the Inventory Vouchers relating to consumption of Raw Materials and components to produce Finished Products during the Manufacturing Process.

Manufacturing Journal Type in Tally

The consumption of consumable materials and production of Finished Product in a manufacturing process are recorded in Manufacturing Journal. Unlike Sales (Materials Out) or Purchase (Materials In), in Manufacturing Journal, both way transactions (consumables Materials Out & produced materials In) are recorded in same voucher .

Manufacturing Journal Type Creation in Tally : To create a Manufacturing Journal Type, create a Stock Journal Voucher Type and then specify it as Manufacturing Journal Type.

Products Manufacturing Journal Creation in Tally

Voucher Type creation has been explained earlier. Here we explain the points specific to Manufacturing Journal Voucher Type creation. At Voucher Type creation screen (GoT>Inventory Info>Voucher Type) :

Voucher Type : At Type of Voucher, select Stock Journal.
Manufacturing Journal : Set Yes at Use as a Manufacturing Journal

Save the Manufacturing Journal Voucher Type

Products Manufacturing Journal Entry in Tally

Manufacturing Journal is the record of Materials Produced and the corresponding materials consumed for the Production, in a manufacturing process.

At Gateway, select Inventory Voucher, click F7: Stk Journal button and then select Manufacturing Journal from the list of Voucher Types, to get Manufacturing Journal entry screen.

Manufacturing Journal Type selection

At Manufacturing Journal entry screen, after entry of Voucher Number & Date as usual, enter the Production & Consumption details as follows:

Manufacturing Journal Entry

Production Item Details
Consumption Items Details
By Product / Joint Products / Scrap Details
Manufacturing / Additional Expenses

Production Details entry in Manufacturing Journal in Tally

At top part enter details of Manufactured Item

Produced Item Name: At Name of Product, select the Item Produced.
Production Quantity: At Quantity, enter the Quantity Produced.
Allocation % : At % of Cost Allocation, enter the % of total cost to be allocated to the Product (In case of single product, normally 100% Cost is allocated to the Product).
Other Details : Enter other details as follows, as activated and applicable

Batch : If Batch number is activated for the Item produced , enter the Batch Number, Mfg Date & Expiry Date , as applicable.
Godown: If Multiple Godown is also activated, enter the Godown Name
BoM: If BoM is specified for the Item, select the BoM Name

The stock of the Item produced will increase by the Production quantity entered here.

Consumption Details entry in Manufacturing Journal in Tally

On entry of the Production details, enter the details of Consumption Items as below :

Item Name: If BoM is selected, at Name of Item column, the Item consumed as per BoM is displayed. You may also select a new Item consumed to add in the list. If no BoM is specified, select the Item.
Consumption Quantity: If BoM is selected, at Quantity column, the computed Standard Consumption Quantity is displayed, which you may change. If no BoM is specified, enter the Item Quantity.
Rate: At Rate column, the Standard Cost as entered in the Item (if any) is carried, which you may change. Otherwise, enter the Rate (Cost) of the Item.
Item Cost: The computed cost of the Item is displayed at Amount Column, which you may change.

The stock of the Items consumed will be reduced from the bt the quantity specified against the respective Stock Item in consumption side.

Manufacturing Journal entry using BoM in Tally

Manufacturing Expenses entry in Manufacturing Journal in Tally

The Total Cost is composed of two main components. Cost of Material Consumed and Manufacturing Expenses. The Costs are shown at the Right Part .

Cost of Components : The total cost of components consumed, as shown at the left part , is carried at the at the right part.

Manufacturing Expenses : Apart from Cost of Components, additional expenses (like manufacturing direct expenses, overheads etc) are also incurred for the manufacturing process. Enter these expenses as % of the Cost of Components so arrived.

Enter the details of each Expenses Ledger as explained below:

Expense Ledger Account: At Name of Item column, select the Expenses Ledger Account (or press Alt+C to get Ledger Creation screen, create the Ledger Account and select it)
Expense Rate: At next field, enter the expenses Rate in % (or you leave it blank)
Expense Amount:
If Expenses Rate is specified, the computed amount of Expenses (Total Component Cost x Expense Rate / 100) is shown at Amount column, which you may change.
If Expenses Rate is not specified, enter the Expense Amount at Amount column

This way, enter for all the expenses.

Manufacturing Journal is a pure Inventory Voucher. Only stock if the Items get affected. The Ledger Accounts (Expenses Accounts) entered in the Mfg Journal are not affected.

The following figures as computed from the Item details as entered are shown :

Effective Cost : The Total Cost (Cost of Components & Manufacturing Expenses) is shown at Effective Cost
Primary Production Item Rate : The computed Cost of production per unit (Cost of Production / Production Quantity) is displayed.

Scrap / Joint / Bye Product entry in Manufacturing Journal in Tally

Sometimes, Bye Products, Joint Products are also produced. The Standard Bye Product / Joint Product / Scrap as specified in BoM is not carried in the Mfg Journal. You should enter the details of any such product received in the Production Process at the right side, as follows:

Item Name : At Name of Item, select the additional Item of Scrap / Bye Product / Joint Product received.
Cost Allocation : At % of Cost Allocation, enter the % of Total Cost which is attributed to the Item produced. The % specified here would be reduced from the % specified at the major finished Item specified at the top part. For example, if you specify 0.5% for scrap, the % of cost would reduce from 100% to 100% – 0.5%, i.e 99.5 %). This way, the % will get reduced by the % specified for the Items at Right Part.
Quantity : Enter the Quantity of the Item Received
Rate / Amount : If any % allocation is specified, then the amount is computed accordingly and shown at Amount column . The Rate is computed from the Amount and the Quantity and shown at Rate column. If no Cost Allocation % is specified, the Rate and Amount remains zero

Primary Production Item Cost : The Total Cost less the Cost Allocated to Joint /Bye Product / Scrap is Cost , is allocated to the Primary Item produced, as shown at the header. This is shown at Allocation to Primary Item.

Production & Consumption Report in Tally

We have already explained Stock Journal Report. If you have created Manufacturing Journal also, you may get the report of Production & Consumption, as entered in Manufacturing Journal

Select Display > Inventory Books > Movement Analysis > Transfer Analysis and select the Manufacturing Journal Type

Selection of Voucher Type in Production & Consumtion Report in Tally

Now the Production & Consumption report is displayed.

Production & Consumption Report in Tally

Production & Consumption Report Display Configuration in Tally

At Production & Consumption report, click F-12:Configure to get Production / Consumption Report Configuration screen, to set the options as follows :

Production Details : At Show Goods In (Production) Column, set Yes to display the figures of Production at Goods In (Production) section, in the activated columns.
Consumption Details : At Show Goods Out (Consumption) Column, set Yes to display the figures of Consumption at Goods Out (Consumption) section, in the activated columns

Production & Consumption Report Display Configuration in Tally

Production & Consumption Report Display Buttons in Tally

Production / Consumption Report Display Button Bar

Production & Consumption Analysis Report in Tally

Item Voucher Analysis Report of Transfer Voucher has been explained earlier. To get Item Voucher Analysis of Production / Consumption Items, at Production / Consumption Report, drill down through a Stock Item to get Item Analysis Report.