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Introduction
Overhead costs are expenses that a company incurs in order to operate its business. These costs are not directly associated with the production or delivery of goods and services, but are necessary for the smooth operation of the company. Activities that cause overhead include all the non-value-added activities that a company undertakes to keep its business running efficiently. In this article, we will discuss the various activities that cause overhead.
Administrative Activities
Administrative activities are the activities that a company undertakes to manage and support its business operations. These activities include accounting, legal, human resources, and other similar functions. These activities are necessary for the smooth functioning of the company, but they do not directly contribute to the production or delivery of goods and services.
Accounting
Accounting is the process of recording, classifying, and summarizing financial transactions. This activity is necessary for the company to keep track of its financial performance and to comply with regulatory requirements.
Legal
Legal activities include the drafting of contracts, compliance with laws and regulations, and resolving legal disputes. These activities are necessary for the company to operate within the legal framework and to protect its rights and interests.
Human Resources
Human resources activities include recruiting, training, and managing employees. These activities are necessary for the company to attract and retain talented employees and to ensure that they are productive and motivated.
Facility Maintenance
Facility maintenance activities include the upkeep of the company’s physical infrastructure, such as buildings, equipment, and vehicles. These activities are necessary to ensure that the company’s facilities are safe, clean, and functional.
Building Maintenance
Building maintenance activities include cleaning, repairs, and renovations. These activities are necessary to ensure that the company’s buildings are safe, clean, and functional.
Equipment Maintenance
Equipment maintenance activities include repairs, preventive maintenance, and replacement. These activities are necessary to ensure that the company’s equipment is functioning properly and to avoid breakdowns and downtime.
Vehicle Maintenance
Vehicle maintenance activities include repairs, preventive maintenance, and replacement. These activities are necessary to ensure that the company’s vehicles are safe, reliable, and efficient.
Information Technology
Information technology activities include the management of the company’s computer systems, software, and data. These activities are necessary to ensure that the company’s information is secure, available, and reliable.
Hardware Maintenance
Hardware maintenance activities include repairs, upgrades, and replacement of computer hardware. These activities are necessary to ensure that the company’s computer systems are functioning properly and are up-to-date.
Software Maintenance
Software maintenance activities include updates, patches, and upgrades of computer software. These activities are necessary to ensure that the company’s software is secure, reliable, and up-to-date.
Data Management
Data management activities include the storage, backup, and retrieval of company data. These activities are necessary to ensure that the company’s data is secure, available, and up-to-date.
Conclusion
In conclusion, activities that cause overhead include all the non-value-added activities that a company undertakes to keep its business running efficiently. These activities are necessary for the smooth operation of the company, but they do not directly contribute to the production or delivery of goods and services. By understanding the various activities that cause overhead, companies can better manage their expenses and improve their profitability.
