Overhead (business)

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In business, overhead or overhead expense refers to an ongoing expense of operating a business; it is also known as an "operating expense". Examples include rent, gas, electricity, and labour burden. The term overhead is usually used when grouping expenses that are necessary to the continued functioning of the business but cannot be immediately associated with the products or services being offered (i.e., do not directly generate profits).[1] Closely related accounting concepts are fixed costs and variable costs as well as indirect costs and direct costs.

Overhead expenses are all costs on the income statement except for direct labour, direct materials, and direct expenses. Overhead expenses include accounting fees, advertising, insurance, interest, legal fees, labor burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities.[2]

References[edit]

  1. ^ PMO and Project Management Dictionary
  2. ^ Putting Cost Back into Pricing: Calculating Overhead Percentages