Overhead is a luxury
By Ken Matesz
The word “overhead,” in business, is an accounting term that refers to all ongoing business expenses not including or related to direct labor, direct materials or third-party expenses that are billed directly to customers.
In my masonry heater business, the firebox door to be installed on the customer’s project is a direct material expense of the project, not overhead. But the phone bill I receive for having the ability to call customers is an overhead cost. My truck and its maintenance is overhead. Replacement diamond blades are overhead costs as are things like the maintenance of a brick saw.