![]() ![]() Every company generally has a basic insurance plan to protect the company's physical assets from fire, flood and theft. Insurance - A company or business can have different types of insurance depending upon its nature. Utilities - Utilities include electricity, water and gas supply, internet bills and phone services bill Rent - Cost for maintaining the office space and production units ![]() If a company has to pay rent for both its production unit as well as office, then the rent paid for the production unit can be allocated to production. Overhead expenses, although fixed can be allocated to production as well.The electricity bill can be more for a month when production was more. An example of a variable overhead expense can be an electricity bill.Overhead expenses are mostly fixed but they can be variable or semi-variable.A calculation of the company's overhead expenses is required to calculate its net income (known as the bottom line).The company must pay its overhead expenses, irrespective of its profits or how little or how much it has sold.Calculating a company's overhead expense is important as it helps in the planning of budgets and also gives an indication of the cost a company must set for its products and services in order to earn a profit. They are expenses incurred to support the business. Overhead expenses are ones that a company pays but they are not directly related to a product or service. ![]()
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