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What are Overhead Costs?

Overhead Costs

What are Overhead Costs?

Overhead Costs are the costs associated with running a business. These include the costs of running a business, creating a product, marketing it, and many other things involved in a business. Overhead Costs can also be called overheads or operating expenses.

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Types of Overhead Costs

Overhead Costs are a mixture of three types of costs:

  • Fixed Costs: These are costs that stay the same over the history of payments. Things like rent, salary, reoccurring office orders, insurance costs, etc.
  • Semi-Variable Costs: Semi-variable costs differ over time but not drastically, such as a salesperson’s monthly commission, or utility bills throughout the year.
  • Variable Costs: Costs that are different each time they are paid are called variable costs. These include the cost of raw materials and cost for maintenance.

Examples Of Manufacturing Overhead Cost

There are many examples of these but manufacturing Overhead Costs include, but are not limited to:

  • Rent
  • Machinery Depreciation
  • Utility Bills
  • Facilities Maintenance
  • Insurance
  • Taxes
  • Salary
  • Raw Materials

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