Overhead - What is meant by overhead cost?

Q: What is meant by overhead cost?

Overhead refers to the ongoing costs to operate a business but excludes the direct costs associated with creating a product or service. ... There exist different categories of overhead, such as administrative overhead, which includes costs related to managing a business. The income statement reports overhead expenses.

Answer

A company's overhead are its general running expenses; they do not include the actual costs of making a product or providing a service. Administrative overhead, which comprises expenditures associated with running a company, is one type of overhead. Revenue is a reflection of all costs, including overhead.

Overhead - What is meant by overhead cost?

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