Overhead

From WikiMD's Wellnesspedia

Overhead refers to the ongoing business expenses not directly attributed to creating a product or service. It is important for budgeting purposes but also for determining how much a company must charge for its products or services to make a profit. In healthcare, overhead costs can include administrative expenses, utilities, and salaries of non-medical staff.

Definition[edit | edit source]

Overhead (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. It is used in cost accounting to calculate the cost of a product or service.

Types of Overhead[edit | edit source]

There are three types of overhead: fixed, variable, and semi-variable.

  • Fixed overhead costs are costs that do not change with the level of output. These can include rent, insurance, and salaries of non-medical staff.
  • Variable overhead costs are costs that vary with the level of output. These can include utilities and supplies.
  • Semi-variable overhead costs are costs that have elements of both fixed and variable costs. These can include maintenance costs.

Overhead in Healthcare[edit | edit source]

In the healthcare industry, overhead costs can be significant. These can include the costs of administrative staff, utilities, and non-medical supplies. It is important for healthcare providers to manage these costs effectively in order to provide quality care while also maintaining financial sustainability.

See Also[edit | edit source]

References[edit | edit source]


Overhead Resources

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