Overhead Cost

What is Overhead Cost?

Overhead cost is the indirect recurring costs of running a business such as administration, selling, and premises expenses.

They are all the support costs of a business which are not directly attributable to the goods or services that the business is producing.

Overhead cost continues to be incurred whether goods or services are produced and sold or not, this is in contrast to variable costs which only occur when goods or services are produced and sold.

Overhead cost is sometimes referred to as Fixed costs although they are not always actually fixed. Being fixed simply refers to the fact that the overhead cost does not vary directly in relation to the level of goods or services the business is producing. Overhead cost does not remain constant it tend to increase in steps as a business grows.

For further information on a Overhead Cost see the Wikipedia definition.

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Last modified March 23rd, 2016 by Team

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