What is Overhead?
Overhead is the ongoing cost of running a business that is not tied to making or selling a single item, such as rent, electricity, salaries and internet.
Updated
Meaning
English
Overhead is the ongoing cost of running a business that is not tied to making or selling a single item, such as rent, electricity, salaries and internet.
Roman Urdu
Overhead karobar chalane ke woh Expense hain jo kisi ek item se nahi jurte, jaise kiraya, bijli, tankhwah aur internet.
Also called running costs, fixed expenses, overheads.
Example
A shop pays 60,000 rupees rent, 25,000 electricity and 90,000 salaries each month. Those 175,000 rupees are its overhead, whether it sells much or little.
Why track it
Gross profit must cover overhead before there is any net profit. To price correctly, know your monthly overhead and how many sales you need to cover it; see break-even point. Record each expense under a clear head so you can see which ones grow.
In Nafaa
Nafaa records expenses by category and shows them in the profit and loss report. See expenses and reports.
Related terms
- Operating Expenses
Operating expenses are the regular costs of running a business that are not part of the goods sold, such as rent, salaries, electricity and internet.
- Break-Even Point
The break-even point is the level of sales at which gross profit exactly covers fixed expenses, so the business makes neither profit nor loss.
- Net Profit
Net profit is what is left from sales after the cost of goods and all business expenses have been taken off.