Standard Cost for Stock Items in TallyPrime: 3 Steps + Example

In TallyPrime, setting a Standard Cost for stock items is useful for maintaining consistency in cost tracking, especially when prices fluctuate.

By specifying a standard cost, you create a benchmark cost that assists with comparisons between actual costs and the standard reference cost, aiding in analyzing cost variances and maintaining control over inventory expenses.

Table of Contents

1. Steps to Specify Standard Cost for Stock Items in TallyPrime

1. Enable Standard Cost Feature

First, you need to ensure that Standard Cost tracking is enabled.
Go to Gateway of Tally → F11: Features → Inventory Features.
Set Use Standard Rates for Stock Items to Yes.

2. Create or Alter the Stock Item with Standard Cost

Go to Gateway of Tally → Inventory Info → Stock Items → Create (or Alter if the stock item already exists).
Enter the name of the Stock Item (e.g., Product A).
Under Rate of Duty, select Standard Rates.

3. Enter Standard Cost Details

In the Standard Rates section, you can set specific costs for different periods if needed.
Enter the Standard Cost value for the stock item based on the desired rate per unit. For instance, set a standard cost of ₹100 for each unit of Product A.

2. Example Scenario of Standard Cost for Stock Items in TallyPrime

Let’s say your company sells Product A and has seen fluctuating purchase costs. You decide to set a standard cost of ₹100 per unit to serve as a baseline reference.

1. Set Standard Cost:

In the Stock Item settings for Product A, enter ₹100 as the Standard Cost.
Save the stock item.

2. Usage in Transactions:

When entering purchase or sales invoices involving Product A, the system will reference this ₹100 standard cost in reports.

If actual purchase prices are higher or lower than ₹100, TallyPrime can help identify these variances.

3. Benefits of Setting a Standard Cost for Stock Items in TallyPrime

1. Variance Analysis:

Compare actual purchase prices with the standard cost, allowing for easier identification of cost-saving opportunities or overspending.

2. Pricing Consistency:

Useful for maintaining consistent pricing models when preparing for cost-plus pricing strategies.

3. Inventory Control:

Improves overall control by ensuring inventory values align with the set standards, even as market prices change.

Setting a standard cost for stock items in TallyPrime helps companies maintain control over inventory costs, streamline price comparison, and track any variances effectively.

This method is particularly valuable for budgeting, reporting, and decision-making on inventory management.