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Overhead, also known as indirect expenses, is the cost of running a business. Without overhead expenditures, a company would not be able to function, but overhead does not contribute directly to the generation of profits. In a simple distinction between indirect and direct expenses, the desk an employee sits at is considered an indirect expense, while the materials for the product the employee fabricates at the desk are a direct expense. Without the desk, the employee cannot work, but the desk does not produce profits, while the materials the employee works with to produce a product do generate a profit.
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Posted : 16/12/2010 1:18 pm
Re: Business Overhead
Business owners have to consider overhead when they price products and services, and sometimes overhead can be a serious problem. If a retail store selling clothing pays a great deal for a premium location, for example, it must charge high prices for its stock, but customers may not be inclined to pay those prices, because they cannot see the reasons why the clothes should be so expensive. In this situation, the store may be forced to slash prices, which could mean that it barely meets its operating expenses.
Posted : 20/12/2010 3:19 am
Re: Business Overhead
Business Overhead are those expenses that help you in running your business. They are the on going expenses. They are also known as Operating Expenses like Rent, Ga, Electricity, Wages, etc.
They are a part of all the Business Organisation, big or small.
Overhead can be classified under four headings:
1)Functional classification.
2)Classification on the nature of expenditure.
3)Element-wise classification.
4)Classification on behavior of expenditure.
Posted : 26/08/2011 7:44 am
Re: Business Overhead
Overhead coverage of spending is intended to replace the company is total cost of ownership, when it is available. Operating above policy will pay benefits at the expense of one or two years the waiting period.
Posted : 29/08/2011 6:16 am
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