Overhead
Indirect production costs not directly tied to product: factory rent, utilities, depreciation, supervision.
Formula
Total Costs = Variable Costs + Fixed Costs (Overheads)
Real World
A Greggs bakery pays rent, electricity, and supervisory wages regardless of how many sausage rolls it sells — these overheads must be covered before any profit is made.
Exam Focus
Don't confuse overheads with variable costs — overheads remain fixed regardless of output level.
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