Selling and Distribution Overheads Homework Help

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What are Selling and distribution overheads?
Selling overhead means the cost that is incurred for promotion/encouragement of sales and to retain the customer base. The Distribution overhead, on the other hand, involves warehouse charges and product delivery charges. If both are taken into account, the following costs are involved:

  • Marketing cost, including Advertisement and Publicity
  • Sales promotion, Hiring of Shelf-space for demonstration etc.
  • Selling cost
  • Distribution cost for distributing to the Customer points
  • Publicity cost
  • Commissions & Incentives payable to Sales Force, including Sales Managers
  • After-sales support

Selling overhead is incurred by promoting sales before an order is placed; distribution overhead is incurred for completing the same by moving it from warehouse to the customer.

Features of Selling and Distribution Overhead:

  • Type of expenses:

It is important to differentiate between fixed charges, variable charges, and promotional charges and take a note accordingly.

  • Type of product:

The selling and distribution costs largely vary product wise, so it is important to make a note of that.

  • Type of operational cost:

There is a need of proper analysis for costs related to selling, transportation, warehouse, advertisement and promotion, administrative and other related expenditures.

  • Type of customer:

The will vary with the type of customer. We need to analyze if the customer is domestic or foreign, retailer or wholesaler, private or government customer.

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