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Accounting & Tax vocabulary · Costs & Budgeting

Overhead

Meaning in accounting & tax, with examples

/ˈoʊvərhed/nounCommon term

In accounting & tax, overhead means: The ongoing costs of running a business that cannot be linked directly to one product or service, such as rent, utilities, office staff and IT.

In Turkish: genel giderler, genel üretim giderleri, dolaylı giderler

How it is used

Usually uncountable in American English (overhead) and plural in British English (overheads). Cost accountants allocate or absorb overhead into product costs.

Example sentences

  1. We moved to a smaller office to cut overhead.

  2. Factory overheads are allocated to products based on machine hours.

Common collocations

  • reduce overheads
  • overhead costs
  • allocate overhead
  • manufacturing overhead
  • overhead rate
  • fixed costA cost that stays the same in total whatever the level of production or sales, at least in the short term, such as rent, insurance or salaried staff.
  • cost centerA department or unit, such as HR, IT or a production line, to which costs are assigned so that managers can track and control spending.
  • variable costA cost that rises or falls in line with the volume of production or sales, such as raw materials, packaging or sales commissions.
  • expenseA cost a business has used up in a period to earn revenue, such as salaries, rent, electricity or advertising, which reduces profit.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Costs & Budgeting

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This page explains English vocabulary for learners. It is not financial advice.