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TALLY TUTORIAL

A Bill of Materials contains a list of items that make up another item.  In other words, it is a list of constituent items for a product.

Enable Bill of Materials Facility

To activate or enable Bill of Materials go to Gateway of Tally, Click on F12:
Configure and select Accounts/inventory Info from the menu.  Now say yes to "Allow component list details (Bill of Materials)?".

A Bill of Material should be available while manufacturing an item.  Hence, first enable manufacturing entries.  This is done through a stock journal.

Create a new manufacturing journal

Create a new voucher type called Manufacturing Journal under Stock Journal.  

1. To create a new Manufacturing Journal go to Gateway of Tally.  Select Accts Info, Voucher Type and then Create.

2. Give Mfg.Journal (Manufacturing Journal) as the name and under ' Voucher types' select Stock Journal.  

3. Follow the normal Voucher type creation as explained earlier for the rest.  

4. Select Yes for "Use as Manufacturing Journal" and accept the screen.  

Create a Bill of Material

Tally walk-through to specify its Bill of Materials

Therefore,

1. Create a stock item Television.  Create it under a new stock group Home Electronics.
2. Unit of measure - nos.  
3. Say Yes to "Set Components (BoM)?"  
4. Once this is made to yes it takes you to a screen where you can enter 1 each for Unit of Manufacture and items VDU, Picture tube, IC Chips, Sound Card and aerial which are required for the assembly of one Television.  These items do not exist.  Create     them and group them under a stock group Television Parts.  Unit of measure - nos.
5. Give Standard Cost for each of the items as follows:-
6. VDU - 2000, Picture Tube - 3750, Sound Card - 500, IC Chips - 5000, Aerial - 300.
7. You propose to store them On-Site.  Accept the screen.  Accept all other defaults.  None of the items will have any opening stock balance.

The purpose of creating a bill of material is to enable consumption of the materials in the ratio specified when the product is manufactured.  Tally uses a Manufacturing Journal to enter goods manufactured with bill of materials.

First you should purchase the components required to produce the television.  Make a purchase voucher entry as follows:

On 21 December 98, bought 10 pcs each of the following at the standard cost mentioned against them:

1. VDU - 2000, Picture Tube - 3750, Sound Card - 500, IC Chips - 5000, Aerial - 300.

Paid cheque from Current Account immediately.  Stored On-Site.  Account ­Purchases.  Ignore Tax.

Manufacturing Journal Entry

From the Gateway of Tally Menu select Voucher Entry, As you have created new voucher type Mfg.  Journal, a pop-up menu will show both the default Stock journal and the manufacturing journal.

1. Select manufacturing journal.  
2. Under the Name of Product to be manufactured, type Television.  
3. Manufacture it in the On-Site.  
4. Quantity to be manufactured - 5.  
5. Under Component (consumption) the component list for the television to be manufactured under proportionate quantity of each component is picked up automatically.  The default location as specified in the BoM is also given for each component.  The standard cost is picked up for each item.  However the entire component list can be altered.  
6. It will take you to the screen giving the details of additional cost.  Under Additional Cost Components you may specify the additional cost incurred for producing the item.  
Additional cost of Wages - 3000 and Power - 2000 have been incurred.  Add them in.  If ledger accounts for these expenses do not exist, create them under Direct Expenses.  
7. Note that the additional costs entered for the Iedgers, do not reflect in the relevant ledger with the amount but only add to, the cost of the item.

Manufacturing journal :