Learn how to convert raw materials into finished goods using Manufacturing Journal and Stock Journal in TallyPrime. Explore BOM creation, material consumption, production entries, manufacturing cost calculation, and inventory management with practical examples.
Manufacturing Journal / Stock Journal in TallyPrime: How to Convert Raw Materials into Finished Goods
Introduction
In a manufacturing business, raw materials are purchased, processed, and converted into finished products before they are sold to customers. Keeping track of this entire process is important because businesses need to know how much raw material they have used, how many finished products they have produced, and what quantity remains in stock.
TallyPrime makes this process easier through Manufacturing Journal and Stock Journal.
These inventory vouchers help businesses record the movement of materials from raw material stock to finished goods. They also help maintain accurate inventory records, calculate material consumption, and monitor production activities.
For example, imagine you run a furniture manufacturing business. You purchase wood, screws, polish, and other materials to manufacture tables. When these materials are converted into finished tables, you need to reduce the raw material stock and increase the finished goods stock.
Instead of recording these movements manually, you can use the Manufacturing Journal in TallyPrime.
In this guide, you will learn how Manufacturing Journal and Stock Journal work, how to configure them, and how to record raw material consumption and finished goods production step by step.
What Is a Manufacturing Journal in TallyPrime?
A Manufacturing Journal is an inventory voucher used to record the conversion of raw materials into finished goods.
It records two important inventory movements:
Consumption: Raw materials are removed from inventory because they are used in production.
Production: Finished goods are added to inventory after manufacturing.
The voucher helps maintain accurate stock quantities and production records.
For example, suppose a company manufactures wooden chairs. To produce 10 chairs, it uses:
50 kg of wood
10 litres of polish
40 screws
After production, the company receives 10 finished chairs.
The Manufacturing Journal records the consumption of these materials and the production of 10 chairs in a single manufacturing transaction.
This makes it easier to understand how much material was consumed and how many finished products were produced.
What Is a Stock Journal in TallyPrime?
A Stock Journal is an inventory voucher used to record stock transfers, material consumption, and stock conversions.
It is useful when inventory moves from one location to another or when raw materials are converted into finished products.
For example:
Transferring goods from one godown to another.
Moving raw materials to a production location.
Recording material consumption.
Increasing finished goods stock after production.
A Stock Journal can also be used for manufacturing activities when the manufacturing feature is not being used.
However, for businesses that regularly manufacture products, the Manufacturing Journal provides a more structured way to record production and material consumption.
Manufacturing Journal vs Stock Journal: Key Differences
Although both vouchers record inventory movements, their purposes are slightly different.
Feature | Manufacturing Journal | Stock Journal |
|---|---|---|
Main purpose | Manufacturing finished goods | Recording stock movements |
Raw material consumption | Yes | Yes, through stock transfer entries |
Finished goods production | Yes | Yes, through stock transfer entries |
Godown transfer | Not its primary purpose | Yes |
Manufacturing details | Structured manufacturing entry | General stock movement entry |
Production recording | Suitable for manufacturing | Suitable for basic stock conversion |
Inventory tracking | Yes | Yes |
Which voucher should you use?
If your business regularly converts raw materials into finished goods, Manufacturing Journal is generally the better option.
If you only need to transfer stock between godowns or record general inventory movements, Stock Journal is more suitable.
How to Enable Manufacturing Features in TallyPrime
Before recording manufacturing transactions, you need to check the inventory configuration.
Follow these steps:
Open your company in TallyPrime.
Go to F11 (Features).
Open the inventory-related configuration options.
Enable the manufacturing-related features available in your TallyPrime release.
Save the configuration.
Depending on your TallyPrime version and configuration, some manufacturing options may be available through voucher configuration rather than directly in the F11 screen.
Once the required features are enabled, you can create the necessary stock items and record manufacturing transactions.
Create Raw Material Stock Items
Before recording production, you must create stock items for all raw materials used in manufacturing.
For example, consider a furniture manufacturing company that produces wooden tables.
It may require the following raw materials:
Raw Material | Unit |
|---|---|
Wood | Kg |
Screws | Nos |
Polish | Litre |
Packaging Material | Nos |
To create a raw material stock item:
Open Gateway of Tally.
Go to Create.
Select Stock Item.
Enter the stock item name, such as Wood.
Select the appropriate Stock Group.
Choose the unit of measurement.
Enter the opening balance, if applicable.
Save the stock item.
Repeat the same process for all raw materials.
Practical example: If you have 500 kg of wood in your warehouse, enter the opening stock as 500 kg, along with the applicable rate and value.
TallyPrime can then use this inventory information when recording material consumption.
Create Finished Goods Stock Items
After creating raw materials, you also need to create the finished products manufactured by your business.
For example:
Finished Product | Unit |
|---|---|
Wooden Table | Nos |
Wooden Chair | Nos |
Office Desk | Nos |
To create a finished goods stock item:
Open Gateway of Tally.
Select Create.
Choose Stock Item.
Enter the finished product name, such as Wooden Table.
Select the appropriate Stock Group.
Choose the unit of measurement.
Enter the opening balance, if applicable.
Save the item.
Now, both raw materials and finished goods are available in your inventory masters.
Create a Bill of Materials (BOM) in TallyPrime
A Bill of Materials (BOM) is a list of raw materials and their quantities required to manufacture a finished product.
It helps businesses define the material requirements for each product.
For example, suppose you manufacture one wooden table.
The BOM may look like this:
Component | Quantity Required |
|---|---|
Wood | 20 kg |
Screws | 12 Nos |
Polish | 1 Litre |
Packaging Material | 1 Nos |
This means that manufacturing one wooden table requires 20 kg of wood, 12 screws, 1 litre of polish, and 1 packaging unit.
When you manufacture 10 tables, the total material requirement becomes:
Component | Quantity for 10 Tables |
|---|---|
Wood | 200 kg |
Screws | 120 Nos |
Polish | 10 Litres |
Packaging Material | 10 Nos |
To create a BOM, open the relevant finished goods Stock Item and check the inventory or component-list configuration available in your TallyPrime version.
Enable the BOM option where available and enter the component stock items with their required quantities.
Save the configuration.
The BOM helps standardise production and reduces the need to enter material requirements manually for every manufacturing batch.
How to Record Manufacturing Journal in TallyPrime
Once your raw materials, finished goods, and BOM are ready, you can record the manufacturing transaction.
Let's understand the process with a practical example.
Example:
A furniture company manufactures 10 wooden tables.
The materials required are:
Particulars | Quantity | Rate | Amount |
|---|---|---|---|
Wood | 200 Kg | ₹50 | ₹10,000 |
Screws | 120 Nos | ₹2 | ₹240 |
Polish | 10 Litre | ₹300 | ₹3,000 |
Packaging Material | 10 Nos | ₹20 | ₹200 |
Total | ₹13,440 |
The company consumes raw materials worth ₹13,440 and produces 10 wooden tables.
Steps to Record the Manufacturing Entry
Open Gateway of Tally.
Go to Vouchers.
Select Manufacturing Journal from the available voucher options.
If the voucher is not visible, use the voucher selection or configuration options to enable it, depending on your version.
Enter the manufacturing date.
Select the finished goods item, such as Wooden Table.
Enter the production quantity as 10 Nos.
Select the applicable BOM, if configured.
Review the raw material consumption quantities.
Check the material rates and values.
Verify the total manufacturing cost.
Save the voucher.
After saving the entry, TallyPrime records the reduction in raw material stock and the addition of finished goods stock.
Important: The actual voucher screen and field names may vary depending on your TallyPrime release and configuration.
How to Record Manufacturing Using Stock Journal
You can also record raw material consumption and finished goods production through a Stock Journal.
This method is useful for businesses that need to record stock conversion without using a structured BOM-based manufacturing process.
Let's use the same furniture manufacturing example.
The business consumes:
Wood: 200 kg
Screws: 120 Nos
Polish: 10 litres
Packaging Material: 10 Nos
It produces 10 wooden tables.
Steps to Create a Stock Journal Entry
Open Gateway of Tally.
Go to Vouchers.
Select Stock Journal.
Enter the voucher date.
Open the Source (Consumption) section.
Select the raw material stock items.
Enter the consumed quantities and applicable rates.
Open the Destination (Production) section.
Select Wooden Table.
Enter the production quantity as 10 Nos.
Enter or verify the finished goods value.
Check the total source and destination values.
Save the voucher.
The transaction reduces the raw material quantities and increases the finished goods quantity.
Note: Source and destination values should be checked carefully. Where additional production expenses are involved, ensure they are treated correctly according to your inventory valuation and accounting setup.
How to Calculate Finished Goods Manufacturing Cost
Knowing the total production cost is essential for deciding the selling price and calculating profit.
Manufacturing cost generally includes:
Raw material cost
Direct labour cost
Factory overheads
Other production-related expenses
For example, assume a company manufactures 10 wooden tables.
Cost Component | Amount |
|---|---|
Raw Materials | ₹13,440 |
Direct Labour | ₹2,000 |
Factory Electricity | ₹500 |
Other Production Expenses | ₹560 |
Total Manufacturing Cost | ₹16,500 |
The cost of manufacturing one table is:
Therefore, the manufacturing cost of one wooden table is ₹1,650.
Remember that not every expense is automatically included in the Manufacturing Journal. Labour and overhead costs may require separate accounting entries or appropriate cost allocation, depending on your setup.
What Happens to Stock After Manufacturing?
After saving a manufacturing transaction, TallyPrime updates the inventory records.
Let's understand the stock movement with an example.
Suppose the business has the following opening inventory:
Stock Item | Opening Stock |
|---|---|
Wood | 500 Kg |
Screws | 500 Nos |
Polish | 50 Litres |
Packaging Material | 100 Nos |
Wooden Table | 5 Nos |
After manufacturing 10 wooden tables, the stock position becomes:
Stock Item | Opening Stock | Consumption / Production | Closing Stock |
|---|---|---|---|
Wood | 500 Kg | -200 Kg | 300 Kg |
Screws | 500 Nos | -120 Nos | 380 Nos |
Polish | 50 Litre | -10 Litre | 40 Litre |
Packaging Material | 100 Nos | -10 Nos | 90 Nos |
Wooden Table | 5 Nos | +10 Nos | 15 Nos |
This gives the business a clear picture of available raw materials and finished products.
How to Check Manufacturing and Stock Reports in TallyPrime
Recording manufacturing transactions is only one part of inventory management. You should also review stock reports regularly.
TallyPrime provides inventory reports that help you monitor stock levels and movements.
Some useful reports include:
Report | Purpose |
|---|---|
Stock Summary | Shows available stock quantities and values |
Stock Item Report | Displays individual item movements |
Stock Journal Register | Shows recorded stock journal transactions |
Godown Summary | Displays inventory across different godowns |
Movement Analysis | Helps analyse stock inward and outward movements |
To check stock information:
Open Gateway of Tally.
Go to Display More Reports or the relevant reporting section.
Select Inventory Reports.
Open Stock Summary or the required stock report.
Select the relevant period.
Review the closing quantities and stock values.
You can also drill down into individual stock items to investigate inventory movements.
Common Manufacturing Journal Mistakes and How to Avoid Them
Even a small mistake in a manufacturing entry can affect stock quantities and valuation.
Here are some common problems to watch out for.
Incorrect Raw Material Quantity
Entering more or less material than actually consumed can create differences between physical stock and TallyPrime records.
Solution: Verify the material consumption sheet before saving the voucher.
Wrong Unit of Measurement
Selecting kilograms instead of grams or litres instead of millilitres can create major stock differences.
Solution: Create stock items with appropriate units and use them consistently.
Incorrect BOM Configuration
If the BOM contains incorrect material quantities, the system may calculate the wrong consumption for each production batch.
Solution: Review the BOM whenever the production process or product design changes.
Ignoring Production Expenses
Recording only raw material costs may result in an incomplete manufacturing cost.
Solution: Include direct labour and applicable production overheads in your costing process.
Not Checking Closing Stock
Manufacturing entries may be recorded correctly, but incorrect opening balances or other stock transactions can still create differences.
Solution: Regularly compare TallyPrime inventory with physical stock.
Best Practices for Managing Manufacturing in TallyPrime
To maintain accurate production and inventory records, follow these practices:
Maintain separate stock groups for raw materials and finished goods.
Use appropriate units of measurement.
Create accurate BOMs for regularly manufactured products.
Record production transactions on the actual manufacturing date.
Verify raw material consumption before saving vouchers.
Track wastage and rejected materials separately where required.
Review stock valuation regularly.
Reconcile physical stock with TallyPrime reports.
Maintain proper records of labour and factory overheads.
Review manufacturing costs before deciding selling prices.
These practices can help reduce inventory errors and improve production planning.
Frequently Asked Questions (FAQs)
1. What is a Manufacturing Journal in TallyPrime?
A Manufacturing Journal is an inventory voucher used to record raw material consumption and finished goods production.
2. What is the difference between Manufacturing Journal and Stock Journal?
Manufacturing Journal is designed for recording production, while Stock Journal is used for general stock movements, transfers, and stock conversion.
3. Can I convert raw materials into finished goods using Stock Journal?
Yes. You can record raw material consumption and finished goods production using the Source and Destination sections of a Stock Journal.
4. What is BOM in TallyPrime?
BOM stands for Bill of Materials. It defines the raw materials and quantities required to manufacture a finished product.
5. Does Manufacturing Journal automatically calculate production cost?
It can calculate material consumption values based on the configured BOM and inventory rates. Additional labour and overhead costs may need separate recording or allocation.
Conclusion
Manufacturing Journal and Stock Journal are useful tools for managing inventory conversion in TallyPrime. They help businesses record raw material consumption, finished goods production, and stock movements accurately.
For businesses with regular manufacturing activities, using a properly configured Manufacturing Journal and BOM can make production recording easier and more consistent.
For simpler stock conversions and godown transfers, Stock Journal is a practical option.
By maintaining accurate stock items, checking material consumption, and reviewing inventory reports regularly, you can improve stock control and get a clearer picture of your manufacturing costs.
Ultimately, accurate manufacturing records help you manage production more efficiently, reduce material wastage, and make better business decisions.
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