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Finance: What is overhead? 14187 Views
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Description:
What is overhead? Overhead refers to a business’s operating expenses. These can include, rent, supplies, insurance, utilities, payroll, etc. Overhead expenses can be both fixed, such as with rent, or variable, such as with businesses that have seasons of intense activity, like seaside vacation businesses will have more utilities and payroll expenses during the summer than in the winter.
- Social Studies / Finance
- Finance / Financial Responsibility
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Terms and Concepts / Accounting
- Terms and Concepts / Company Management
- Terms and Concepts / Insurance
- Terms and Concepts / Marketing
- College and Career / Personal Finance
- Finance and Economics / Terms and Concepts
Transcript
- 00:00
finance a la shmoop. what is overhead? it's a bird it's a plane it's Shmooperman!
- 00:10
yeah okay we couldn't resist. any on its overhead but has nothing to do with [man wearing cape flies across the sky]
- 00:15
overhead. alright your company is slink Inc. you make yes of course slinkys. they
- 00:22
walk downstairs a loner in pairs and make a slinkity sound.
- 00:26
yeah those. your primary costs in making them are miles and miles and miles of
Full Transcript
- 00:30
flattish wire that kind of smells funny. and then a twisty machine thing then you
- 00:36
heat them up so they remain in that slinky shape forever and well you're
- 00:40
pretty much. done sorta. you've made the product but like where does that product
- 00:45
to live? well you store it here in the slinky condo birthing chamber and you [slinky in a log cabin]
- 00:50
have to rent the warehouse where all of these things live until they get shipped
- 00:54
off to you know the good boys and girls and men with midlife crises all around
- 00:59
the world. all right well that rent is overhead. the shipping of the product
- 01:03
overhead. insurance you need to maintain so that if a slinky drops on someone's
- 01:08
head and spins their hair all around they have to shave or at least that's
- 01:12
the reason we're giving for our baldness at home. that insurance overhead. the
- 01:17
lawyers who had to defend that a head case yep overhead. overhead is basically
- 01:23
everything that isn't directly useful at least in getting a product built and
- 01:28
bought. and it's usually a fixed cost meaning that you can't usually get rid
- 01:32
of overhead no matter how hard you try. like rent lawyers insurance yeah go
- 01:36
negotiate with them. they charge what they charge each month and there's just
- 01:40
not a whole lot you can do about it even if you want it to. oh and the CEO of the [woman throws stacks of cash on a desk]
- 01:45
company the one who meets with Wall Street people and shakes hands with the
- 01:48
people at Amazon well she's overhead. - yeah they really
- 01:51
should put a warning on those things. [man frowns]
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