The term overhead, from a managerial accounting standpoint, is the cost of doing business, other than direct
materials and labor required to make a given product or provide a given service.
Think of today’s small business owner sitting at his desk contemplating the costs related to being in business.
The non-accounting definition of the adjective overhead is described as hanging over one’s head. In this
case, the overhead items are always hanging over one’s head because they are not going away unless the
business does.
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