Overhead Costs

Overhead costs are those costs that are assigned to support processes of the organization or its organizational unit or branch.

Overhead costs in practice: The term overhead costs is sometimes used as a synonym for indirect costs. Which in the case of small organizations may be true, but under certain circumstances overhead costs may be referred to as direct costs, as well. For example a large organization tracks the costs of its branches (regional representations). From its perspective, the overhead costs of this branch are at the same time direct costs for this branch (they can be monitored and assigned to the branch - to a cost object).