Overhead (business)

From Wikipedia, the free encyclopedia

It has been suggested that Operating cost be merged into this article or section. (Discuss)

In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business. The term overhead is usually used to group expenses that are necessary to the continued functioning of the business but that do not directly generate profits.

Overhead expenses are all costs on the income statement except for direct labor and direct materials. Overhead expenses include accounting, advertising, depreciation, indirect labor, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone, travel and utilities.^[1]

Overhead can be classified under four headings^{[citation needed]}

1. functional classification
2. classification on the nature of expenditure
3. elementwise classification
4. classification on behaviour of expenditure

[edit] See also

• Cost accounting
• Fixed cost
• Variable cost
• Operating cost

[edit] References