brotherton-erpnext/erpnext/docs/user/manual/en/accounts/articles/.md

Write a post about distributing same expense among various cost centers.

  

How do i differentiate salaries of 2 departments in cost centers?

9:18:38 AM: Web Notes Support:
    hi Dhaval..

9:18:42 AM: Web Notes Support:
    this is Umair..

9:18:44 AM: Web Notes Support:
    how are you?

9:18:46 AM: Dhaval Shah:
    hey umair

9:18:49 AM: Dhaval Shah:
    m good

9:19:16 AM: Web Notes Support:
    have you created department wise cost center?

9:19:27 AM: Dhaval Shah:
    no we have not yet created cost center

9:19:36 AM: Web Notes Support:
    if so, this is how you should post journal voucher for salary..

9:19:49 AM: Dhaval Shah:
    can you help us in an ideal way to setup up cost centers?

9:19:50 AM: Web Notes Support:
    I will just give you an example first..

9:19:53 AM: Dhaval Shah:
    ok

9:20:09 AM: Web Notes Support:
    if you give 2,00,000 in a monthly salary..

9:20:37 AM: Web Notes Support:
    and divide salary expense in multiple cost center:

9:20:52 AM: Web Notes Support:
    then this how journal voucher will be posted.

9:23:06 AM: Web Notes Support:
    Dr. Salary (Expense a/c) ........... Sales (cost center) ........... 80000
    Dr. Salary .............................. . Manufacturing .................. 70000
    Dr. Salary .............................. . Admin......................... ..... 30000
    Dr. Salary .............................. . Seniors ............................ 20000
    Cr. Bank/Cash account....................... .............................. . 200000

9:23:15 AM: Web Notes Support:
    Debit = Credit - 2,00,000

9:23:25 AM: Dhaval Shah:
    ok

9:23:32 AM: Web Notes Support:
    so, expense account selected will be same..

9:23:45 AM: Web Notes Support:
    but you will divide rows based on cost center.

9:24:00 AM: Dhaval Shah:
    but we have 3 levels of hierarchy

9:24:30 AM: Dhaval Shah:
    like Production Unit -1 > Departments > sections

9:24:49 AM: Dhaval Shah:
    its like a tree,

9:24:57 AM: Dhaval Shah:
    cost center within a cost center

9:25:48 AM: Web Notes Support:
    you can define child - parent relationship in Cost Center master.

9:26:01 AM: Web Notes Support:
    because it is a tree structure master..

9:26:20 AM: Dhaval Shah:
    ya, but here is my problem

9:26:20 AM: Web Notes Support:
    but only child cost centers will be selectable in the transactions..

9:26:28 AM: Dhaval Shah:
    exactly

9:26:52 AM: Web Notes Support:
    https://erpnext.com/user-guide/selling/selling-setup/customer-group

9:27:08 AM: Web Notes Support:
    check this for example on how to manage tree masters

9:28:03 AM: Dhaval Shah:
    so how can i have a cost center of production unit as a ledger as well as parent

9:29:45 AM: Web Notes Support:
    Production (parent)
     - Cutting
     - Stitching
     - packing

9:30:09 AM: Dhaval Shah:
    so how do i track salaries of each of there depts

9:30:15 AM: Dhaval Shah:
    these*

9:30:25 AM: Web Notes Support:
    check attached link for example on how to create group and child Cost Centers.

9:31:00 AM: Web Notes Support:
    in JV, you will select Cutting, Packing department for Cost Center.

9:31:06 AM: Dhaval Shah:
    i have to create each individual ledgers  - cutting salary, stitching salary, packing salary

9:32:15 AM: Dhaval Shah:
    OH! so in JV, when i select Cutting, Packing department for Cost Center. will it show salary as a head in the cost center?

9:32:22 AM: Dhaval Shah:
    as it is a salary JV?

9:32:32 AM: Dhaval Shah:
    or will only the value of the amount show?

9:33:50 AM: Web Notes Support:
    it will show balance for the individual cost center..

9:34:19 AM: Web Notes Support:
    and consolidated cost center for Production Cost Center, which is parent for these cost centers

9:34:38 AM: Dhaval Shah:
    so only amount and not against the type expense

9:38:00 AM: Web Notes Support:
    yes.. it will show again Salary Account as well..

9:38:17 AM: Web Notes Support:
    basically, we tag cost center with Profit and Loss account..

9:38:34 AM: Dhaval Shah:
    ok

9:38:35 AM: Web Notes Support:
    so actual ledger posting happens in the Account/Ledger..

9:38:54 AM: Web Notes Support:
    Cost Center shows balance based on amount mentioned with it..

9:39:17 AM: Dhaval Shah:
    so in cost centers i should just keep all my depts as ledgers and all costs will be tracked for all types of expenses

9:39:23 AM: Web Notes Support:
    so, we need to identify the correct combination of Cost Center and Expense account when making entry

9:39:45 AM: Web Notes Support:
    thats one approach.

9:39:54 AM: Web Notes Support:
    you can try and check if it works for you.

9:40:12 AM: Dhaval Shah:
    what is the other approach?

9:41:53 AM: Web Notes Support:
    as per your scenario, this seems to be better.

9:42:08 AM: Web Notes Support:
    we can comeup with other solution as scenario changes.

9:42:57 AM: Dhaval Shah:
    ok so, just for my knowledge,  what was the default according to you?

9:43:11 AM: Dhaval Shah:
    where do i track cost center transactions?

9:43:43 AM: Web Notes Support:
    there is no default as such

9:43:56 AM: Web Notes Support:
    you can define masters you per your requirement..

9:44:06 AM: Web Notes Support:
    we suggest setting up cost center based on Project..

9:44:19 AM: Web Notes Support:
    because it will help you track profitability as well.

9:44:29 AM: Web Notes Support:
    but thats another scenario.

9:44:41 AM: Dhaval Shah:
    ok

9:44:44 AM: Dhaval Shah:
    cool

9:46:36 AM: Dhaval Shah:
    where to tract cost center reports?

9:47:24 AM: Dhaval Shah:
    track*

9:48:32 AM: Dhaval Shah:
    ?

9:48:51 AM: Web Notes Support:
    Accounts >> Main Reports >> Financial Analytics

9:49:12 AM: Web Notes Support:
    below P&L and Balance Sheet, you will find cost centers for selection.