What is classified as a company overhead expense?

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Company overhead expenses refer to ongoing costs that are not directly tied to the production of goods or services but are necessary for the general operation of the business. Office rent is a prime example of an overhead expense because it is a regular cost incurred regardless of the level of production or the number of sales made by the business.

This cost supports the overall infrastructure needed for a company to function, encompassing activities such as administration, management, and operational support. It remains constant over a certain period, which differentiates it from project-specific costs or variable expenses that fluctuate with production levels. Hence, office rent plays a crucial role in establishing a financial baseline for the company’s operations, making it an essential component of overhead expenses.

In contrast, project-specific marketing, client meeting refreshments, and production costs directly tie into particular projects, clients, or production activities and are thus classified differently from overhead expenses.

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