overhead

(noun)

Any cost or expenditure (monetary, time, effort or otherwise) incurred in a project or activity, that does not directly contribute to the progress or outcome of the project or activity.

Related Terms

Examples of overhead in the following topics:

  • Components of Inventory Cost

    • The cost of goods produced in the business should include all costs of production: parts, labor, and overhead.
    • Overhead costs may be referred to as factory overhead or factory burden for those costs incurred at the plant level or overall burden for those costs incurred at the organization level.
    • Other methods may be used to associate overhead costs with particular goods produced.
    • Variable production overheads are allocated to units produced based on actual use of production facilities.
    • Fixed production overheads are often allocated based on normal capacities or expected production.

  • Cost of Goods Sold and Gross Profit

    • In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service before deducting overhead, payroll, taxation, and interest payments.
    • Costs of goods made by the business include material, labor, and allocated overhead.

  • Costing Methods Overview

    • Note that a manufacturing business's inventory will consist of work in process, or unfinished goods, and finished inventory; the costs of unfinished and finished inventory contain a combination of costs related to raw materials, labor, and overhead.

  • Preparation of the Income Statement

    • It includes material costs, direct labor, and overhead costs (as in absorption costing), and excludes operating costs (period costs), such as selling, administrative, advertising or R&D, etc.