All distribution costs are considered indirect expenses and come under the head of selling and distribution expenses in the company's profit and loss statement. You may not be able to see it in the face of financial statements, but you surely could see it in the note to financial. Accounting/Tax Treatment: These costs are generally treated as operating expenses (often Selling Expenses). Category: Common expense accounts include Shipping Supplies, Packaging Expense, or sometimes grouped under Freight Expense or Delivery Expense. According to IRS guidance, if these materials. Distribution cost is the sum of all expenses (direct and indirect) incurred by any company, firm, individual, or any other entity to deliver their products from the production department to the end consumer.