Overhead

Overhead refers to the ongoing expenses a business incurs to support its operations that are not directly tied to producing a specific product or service. These costs include administrative salaries, rent, utilities, insurance, and equipment depreciation. Overhead costs are essential for maintaining business functions but do not vary directly with sales volume or production levels. Understanding overhead helps in accurately determining the total cost of operations, setting appropriate pricing, and managing profitability. Effective overhead management ensures resources are allocated efficiently, contributing to the overall financial health of the organization.