Overhead

Overhead refers to the ongoing costs associated with operating a business that are not directly tied to the production of a specific product or service. These are necessary expenditures incurred regardless of the sales volume, often categorized as fixed or semi-fixed costs. Understanding and managing overhead is crucial for a business's financial health, as excessive overhead can erode profit margins even if sales are strong. It encompasses a wide array of expenses that support the general operations rather than being part of the direct manufacturing or service delivery process.