Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.

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Overhead costs are expenses that are incurred in running a business but cannot be directly traced to specific units of products or services. Examples include rent, utility bills, depreciation, and administrative salaries. These costs are necessary for the overall operation of the business and are usually allocated to products or services based on indirect factors such as their overall usage of production facilities or the labor needed to produce them.

Overhead Costs Are Not Directly Related to Production and Cannot