Finance Dictionary : Overheads


Explore the concept of Overheads, fixed operational costs in a business that encompass rent, marketing, utilities, and administrative expenses.



Overheads – Fixed Operational Costs


Overheads, in the realm of business operations, refer to the fixed expenses incurred in the day-to-day running of a business. These costs remain consistent over time and do not significantly fluctuate with changes in production or sales levels. Overheads encompass various elements, including rent or lease payments, marketing expenditures, utility bills, and administrative costs.


Understanding and managing overheads is crucial for effective financial planning and cost control. Business owners and managers carefully assess these fixed costs to optimize their budgeting and ensure the sustainability of their operations. By controlling overheads, businesses can enhance profitability and financial stability.


In summary, overheads are an integral component of business financial management, representing the fixed expenses associated with running a company.


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