Selling expenses are expenses that directly relate to the selling of goods and/or services. For example, The Home Depot employs thousands of sales personnel whose job is to assist customers throughout the store and monitor inventory levels. These employee salaries represent a significant selling expense for a company of The Home Depot’s size. As a result, these costs will increase as the company opens new locations or as employees become “more seasoned.” A careful review of The Home Depot’s management discussion and analysis (MD&A) section of the annual report illustrates this point. According to management, a higher payroll expense was realized in 2000 as a result of market wage pressures and an increase in employee longevity. In addition, medical costs increased due to higher family enrollment in the Company’s medical plans, rising health care costs, and higher prescription drug costs.
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Television and radio advertising production costs, as well as media placement costs, are other examples of selling expenses for The Home Depot. Most of these costs are initially capitalized but become an expense as the advertising occurs throughout the year. Selling expenses for The Home Depot as well as other companies might include sales commissions, sales office salaries, travel and e