OVERHEADS Meaning and
Definition
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Overheads, also known as overhead costs or expenses, refer to the ongoing expenses of a business that are not directly attributable to a specific product or service. These costs are incurred by a company in order to operate and maintain its business operations, but do not directly contribute to the production process or result in the creation of a tangible product.
Typically, overheads include expenses such as utilities (electricity, water, heating), rent or mortgage payments for office space, salaries and wages of non-production employees, insurance, taxes, and maintenance costs. These costs are incurred regardless of the level of production or sales and are therefore considered fixed expenses.
Overheads are crucial for the functioning of a business as they provide the necessary infrastructure and support for the production and delivery of goods or services. However, they can also significantly impact a company's profitability if they are not properly managed. Therefore, it is important for business owners and managers to monitor and control overhead costs to ensure efficient operations and maximize profitability.
Understanding the various components of overhead costs allows businesses to accurately analyze the overall cost structure and make informed decisions regarding pricing, budgeting, and cost-cutting measures. By carefully managing overheads, companies can optimize their financial performance and maintain a competitive advantage in the marketplace.
Common Misspellings for OVERHEADS
Etymology of OVERHEADS
The word "overheads" has its etymology rooted in the notion of things above and beyond. It originated from the combination of two simple words: "over" and "heads".
"Over" comes from the Old English word "ofer", which means "above" or "beyond". Its Indo-European root is "*uper", which has a similar meaning. "Heads" are the upper part of the human body. When combined, the word "overheads" refers to objects or expenses that are situated above one's head, typically associated with business or financial aspects.
In a modern context, "overheads" commonly refers to indirect expenses incurred by businesses, such as rent, utilities, salaries, or any other costs not directly tied to the production of goods or services. These costs are considered to be "over" or above the primary operations.
Similar spelling words for OVERHEADS
- overdress,
- overheating,
- ovrette,
- over the sea,
- overheated,
- overheat,
- overdue,
- overeat,
- overhead,
- overdressed,
- overdrive.
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