Overhead And Cost, Is there a Difference?

Overhead

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In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business. The term overhead is usually used to group expenses that are necessary to the continued functioning of the business but that do not directly generate income .
Overhead expenses are all costs on the income statement except for direct labor and direct materials. Overhead expenses include accounting fees, advertising, depreciation, indirect labor, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs.profits.

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Cost

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Here is where things get tricky and you will quickly see where this could be easily manipulated in order to advertise a at cost sale and actually make a profit. There are basically two kinds of cost, indirect cost which would fall into the category of overhead cost, and direct cost which is the cost that is directly involved in a project or job that a company may be doing, labor, and material.

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When a company advertises that you are going to get something at cost, both categories could be used to determine their idea of cost. While the advertisement could merely be a hook in order to sell you other products and/or services, make no mistake, the at cost deal can be manipulated to make a profit.

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The best way to determine if you are being misled and overcharged is to obtain other estimates by companies specializing in the area of the work you wish to have performed.

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