What is overhead?

• A. Salaries and Benefits
• B. Supplies and Equipment
• C. Rent, Mortgage, and Utilities
• D. Travel and Entertainment

Answer: (C)

Overhead refers to the ongoing costs of running the business that aren’t directly tied to making a specific product or delivering a service. These are the expenses that support the entire operation, such as renting or owning the facilities, paying the mortgage, and keeping utilities running. Among the options, rent, mortgage, and utilities fit this description best because they are steady, facility-based costs that exist regardless of production levels. Salaries and benefits are usually direct labor costs tied to people making the product or providing the service. Supplies and equipment can be direct costs or capital investments, and travel and entertainment are more discretionary or tied to sales/marketing activities than the base running costs.