Home Investing Dictionary Investment Term Overhead
Written by Kenny Foo   
Wednesday, 04 March 2009 09:58

Overhead or overhead cost refers to an ongoing administrative expense of operating a business. Since it is a expense in income statement, it is also refered as overhead expenses. Overhead or overhead cost normally cannot be attributed to any specific business activity, but it is necessary for the business to function. On other words, overhead or overhead cost do not directly generate profits. It is all costs in income statement except direct materials and direct labour that generate profit directly. For direct materials and direct labour, it is grouped under Cost of goods sold ( COGS ). Some good examples of overhead or overhead cost are utilities cost, travel expenses, telephone bills, taxes, supplies, repairs, rentals, legal fees, interest, insurances, depreciation, advertising, and accounting fees. Overhead or overhead cost is used to deduct from turnover to find out the net profit for a financial period.

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Last Updated ( Wednesday, 04 March 2009 13:14 )
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