OVERHEADS CHARGE Meaning and
Definition
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The term "overheads charge" refers to an expense incurred by a company that encompasses all the indirect costs associated with running a business, which cannot be directly attributed to a specific product or service. It represents the portion of costs that are linked to the overall functioning and administration of the company as a whole, rather than being directly attributable to a particular production or sales activity.
Overheads charges can include various costs such as rent, utilities, insurance, salaries of employees who are not directly involved in production or sales, office supplies, and general maintenance expenses. These charges are necessary for the day-to-day operations and management of the company, regardless of the level of output or sales volume.
The calculation of overheads charges typically involves the allocation of these costs across different departments or cost centers based on predetermined factors such as floor space, headcount, or usage. This allocation is essential for determining the true cost of producing goods or services and for setting accurate pricing.
Understanding and properly managing overheads charges is crucial for businesses to assess the profitability of their operations, determine pricing strategies, and make informed financial decisions. By accurately tracking and controlling these expenses, businesses can optimize their performance, reduce waste, and improve their overall financial health.
Common Misspellings for OVERHEADS CHARGE
- iverheads charge
- kverheads charge
- lverheads charge
- pverheads charge
- 0verheads charge
- 9verheads charge
- ocerheads charge
- oberheads charge
- ogerheads charge
- oferheads charge
- ovwrheads charge
- ovsrheads charge
- ovdrheads charge
- ovrrheads charge
- ov4rheads charge
- ov3rheads charge
- oveeheads charge
- ovedheads charge
- ovefheads charge
- ovetheads charge
Etymology of OVERHEADS CHARGE
The term "overheads charge" has its etymology rooted in business and accounting terminology.
The word "overhead" itself dates back to the early 19th century and initially referred to the upper framework of a vehicle or mechanical construction. By extension, it came to describe any additional costs or expenses that are incurred in the operation of a business but are not directly tied to a specific product or service.
The word "charge" in this context refers to a fee or cost that is assessed or applied to cover certain expenses. It can also refer to an entry in an account reflecting a debit, or an expense.
Therefore, when combining these two terms, "overheads charge" is used to describe the costs or charges associated with the general expenses and operations of a business, not directly attributed to any specific product or service.
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