Question

Identify & explain the concept from the given illustration.

Sunrise Cosmetic Company spends on advertisements, broadcasts on radio and television as well as distributes free samples of its shampoo product to in order to increase its demand.

Answer 1

Concept: Selling cost

Explanation:

1. Selling cost refers to the cost incurred by the firm to create more demand for its product and thereby, increase the volume of sales. It includes expenditure on advertisements, radio and television broadcasts, hoardings, exhibitions, window display, free gifts, free samples etc. 
2. Since Sunrise Cosmetic Company incurs various kinds of expenditure to increase demand for their shampoo, this illustration is related to the concept of ‘selling cost’.