Distribution Expense

Distribution expense is also called as distribution costs, is the expenses associated with the moving a product or item from the production place to the customers locations of point of consumption. This could mean the cost in order to move products from the warehouse to a person, in the case of the direct sales. Distribution expense could also refer to the expense of moving a product from the warehouse to the retailer where the product is sold to the customers. A distribution expense is part of the cost of doing business. Products are not often produced and sold in the same place. But, a product is produced in a factory or other mass-production place. The product is then transported or shipped from the place where it is made either to customer or to the middleman or wholesaler who sells the items to the retailer or to the end user or customers. The ways of shipment might differ depending upon the structure of the business and the company’s product. For instance, individual products might be transported directly to the end users in the case of a distributor or wholesaler who engages in the direct selling, or thousands of products might be transported from a factory or a wholesaler to retail places where the products are sold to the customers.

Distribution expenses are usually built in to the rate or price of a product. For instance, if a retailer purchases or order products from the warehouse, either the wholesaler or the retailer should pay the cost of the moving those products to the customers or retailer’s place. If the wholesaler or distributors pays the transportation or distribution cost or expense, the wholesaler might charge the retailer more for the buy of the product in order to pay for the distribution expense or cost of the transporting goods. 

Questionnaire:

• What is distribution expense?
• Explain distribution cost?