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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5113
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Advice please. The original cost of our new product was

Customer Question

Advice please.

The original cost of our new product was to be £80, but it has been decided to add an accessory into the box of the product.

The accessory was meant to be a separate giveaway to out of the marketing budget. My question is now the accessory is in the box of the final product is to be treated as cost of finished good. If so this will obviously reduce gross profit and will mean deviating from our financial plan.

Can we still treat accessory as marketing expense therefore lower down in P&L and not affect our GP. We have thought of shipping item separately and putting accessory in box when at final location (selling place), but this will incur additional costs including shipping, duty etc.

Or is there some other way we can avoid affecting our GP.

Thanks in advance for any assistance on this matter.

Submitted: 4 years ago.
Category: Tax
Expert: replied 4 years ago.

Hello and welcome to the site. Thank you for your question.

There is no reason why you can not include the cost of the accessory as part of your marketing cost. It is for convenience and cost saving only that the accessory is being shipped in the same box as the main product.

It is an internal accounting treatment. Your accounting team need to journal the cost of the accessory (a free product to the customer) to marketing expenses.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.


Expert: replied 4 years ago.

Hello Mohinder

I notice you have viewed my response to your original question on how to treat the cost of giveaway without affecting your gross profit (JACUSTOMER-5a6nsdwk- Last Viewed on 04/10/2013 at 14:58).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.