Overhead costs


Overhead costs are the costs of running a firm that are not directly related to the creation or production of a product or service. They are the costs a company must pay to keep in business, such as rent, utilities, insurance, and employee costs.

Overhead costs exclude costs incurred directly in the production of goods or services. These are known as "operating costs" or "direct costs," and they typically include: raw materials, transportation, consumable supplies, and machinery.