👉 The expense of a business not directly assigned to goods or services provided.
Alright class, settle down and letās take a look! Thatās a tricky definition youāve got there ā āthe expense of a business not directly assigned to goods or services provided.ā Let's break it down in a way that makes sense. Think of it like this: when you sell a delicious apple pie, the cost of the apples, the sugar, and the baking time directly goes into the price of that pie. Thatās straightforward! But what about things that arenāt tied to selling just one thing? Those are "overhead" expenses. Overhead is like the background hum of a business ā it's all the costs you need to keep the whole operation running, but they arenāt part of each individual sale. Let's look at some examples: Rent: You pay for your shop or office space, no matter how many pies you sell. Utilities: The electricity and water used in the bakery ā itās not just for baking one pie! Salaries (for staff who aren't directly making pies): Like someone managing the store, or doing accounting. Insurance: Protecting your business from unexpected issues. These are all overhead . They keep the lights on and the wheels turning, but they donāt show up on a single pieās price tag. We often add them up to get a better picture of how profitable a business truly is. Does that rhyme make sense? Do you have any questions about what āoverheadā means?
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