An overview of overhead in cost accounting is provided in the article that follows. Overhead is any cost that is not directly related to the production of profits or that does not generate any kind of revenue for the company; rather, it is regarded as the cost of maintaining a firm or business and expenses incurred during the profit-generating process and cannot be directly linked to any specific business activity.
Although they are tangentially related to output, overhead expenditures are regarded as significant ones. Depreciation is a type of expense that is levied annually to businesses that employ machinery to create goods. Any costs incurred during the production of a good fall under the category of manufacturing costs; however, labour, costs incurred with other parties, repairs, and rent fall under overhead costs.
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In general, there are three categories of overhead costs: