HARRY W. NICK, GOVERNOR. 397

preclude any person, engaged in commerce, in the course of
such commerce, from offering an article "Free", in combination
with an article sold, but in any such case the cost of the "Free"
article shall be considered as a part of the cost of the article
sold.

(a) For the purpose of this section the term "cost" as ap-
plied to production is hereby defined as including the cost
of raw materials, labor and all overhead expenses of the pro-
ducer; and as applied to distribution, "cost" shall mean the
invoice or replacement cost, whichever is lower, of the article,
product or commodity to the distributor and vendor plus the
cost of doing business by said distributor and vendor.

(b) For the purposes of this section, the phrase "cost of
doing business" or "overhead expense" is defined as (1) 6%
of the cost of production or the invoice or replacement cost,
whichever is lower, as the case may be, or (2) all costs
of doing business incurred in the conduct of such business and
must include without limitation the following items of ex-
pense: labor (including salaries of executive and officers),
rent, interest on borrowed capital, depreciation, selling cost,
maintenance of equipment, delivery costs, credit losses, all
types of licenses, taxes, insurance and advertising.

116. In establishing the cost of a given article, product or
commodity to the distributor and vendor, the invoice cost of
said article, product or commodity purchased at a forced,
bankrupt, close out sale, or other sale outside of the ordinary
channels of trade may not be used as a basis for justifying a
price lower than one based upon the replacement cost as of
date of such sale of said article, product or commodity re-
placed through the ordinary channels of trade, unless said ar-
ticle, product or commodity is kept separate from goods pur-
chased in the ordinary channels of trade and unless said arti-
cle, product or commodity is advertised and sold as mer-
chandise purchased at a forced, bankrupt, close-out sale, or by
means other than through the ordinary channels of trade, and
said advertising shall state the conditions under which said,
goods were so purchased, and the quantity of such merchan-
dise to be sold or offered for sale.

117. The provisions of Sections 115 and 116 shall not apply
to any sale made:

(a) In closing out in good faith the owner's stock or any
part thereof for the purpose of discontinuing his trade in any
such stock or commodity, and in case of the sale of seasonal
goods or to the bona fide sale of perishable goods to prevent
loss to the vendor by spoilage or depreciation, provided prior
notice is given to the public thereof;