Overhead

Understanding Overhead 

Overhead costs are routine expenses a business incurs that aren't tied to producing or selling services or goods. They must be paid regardless of the business's profitability. For example, a business must pay rent for its retail space even if no products are sold. 

Overhead Breakdown 

Overhead costs are necessary for a business to operate, including rent, utilities, and insurance. Tracking these can impact business profitability. Overhead expenses are subtracted from revenue to calculate net income, a key indicator of business profitability. 

Overhead Categories 

1. Fixed Overhead
2. Variable overhead
3. Semi-variable overhead

Overhead Examples 

1. Administrative Overheads
2. Rent and Utilities
3. Employee Perks
4. Sales and Marketing
5. Research and Development