overheads

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overheads

or

indirect costs

any COSTS that are not directly associated with a product, that is, all costs other than DIRECT MATERIALS cost and DIRECT LABOUR cost. Production overheads (factory overheads) include the cost of other production expenses, like factory heat, light and power and depreciation of plant and machinery. The cost of factory departments, such as maintenance, materials’ stores and the canteen, that render services to producing departments are similarly part of production overheads. SELLING COSTS and DISTRIBUTION COSTS, and all administration costs, are also counted as overheads since they cannot be directly related to units of product. See also FIXED COSTS.