# Selling & Distribution Overheads

## Meaning

Selling & Distribution Overheads include all indirect costs incurred for selling and distributing the finished goods. These costs arise after the goods are ready for sale and are not part of production cost.

## Key Examples

Selling related	Distribution related
Salesperson commission	Delivery van expenses
Advertisement	Cold storage
Sales office expenses	Secondary packaging

## Quick Distinction

Selling overheads → costs incurred to create demand and secure orders (advertisement, commission, sales office).
Distribution overheads → costs incurred to move the finished goods from factory to customer (delivery van, cold storage, secondary packaging).

> Tip: Primary packaging (which makes the product saleable, e.g., toothpaste tube) is a production cost. Secondary packaging (carton for transport) is a distribution cost.

Worked example

### Example 1

Example — Classify the following as Selling OH or Distribution OH:

Item	Classification
Commission to salesman	Selling OH
Freight outwards on delivery	Distribution OH
TV Advertisement	Selling OH
Cold storage rent for finished goods	Distribution OH
Salary of sales manager	Selling OH
Petrol for delivery van	Distribution OH

⚠️ Common exam mistakes

Treating secondary packaging as production cost — it is a distribution overhead.
Including selling/distribution overheads while computing Cost of Production — they only enter Cost of Sales.
Confusing carriage inwards (production-related) with carriage outwards (distribution-related).

Reference:

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