Wednesday, February 6, 2013

What Are Overhead Costs?

Overhead costs: Until recently, I had heard the word all the time yet had never known what it actually meant.

An overhead cost is just a way that businesses refer to fixed costs. As you will recall, a fixed cost is something that you have to pay for no matter what. For example, if you are running a factory, you MUST pay rent every month (regardless of whether or not you produce even a single item.) You can decide whether or not to turn on the lights in the factory, however, in the short run, rent is an overhead cost.

As senior year workload relaxes, I will continue to update the blog with more bits of information here and there.