Overhead may be defined as the cost of indirect material, indirect labour and such other expenses, including services, as cannot be conveniently charged direct to specific cost centers or cost units. It should be noted that direct costs (materials, labour, etc.) are associated with individual jobs or products. Indirect expenses or overheads are not associated with individual jobs or products; they represent the cost of the facilities required for carrying on the operations.
CIMA, London defines overhead as “Expenditure on labour, materials or services which cannot be economically identified with a specific saleable cost unit”.
