Administrative overhead is those costs not involved in the development or production of goods or services. This is essentially all overhead that is not included in manufacturing overhead. Examples of administrative overhead costs are the costs of:
- Front office and sales salaries, wages, and commissions
- Office supplies
- Outside legal and audit fees
- Administration and sales office lease
- Administration and sales utilities
- Administration and sales telephones
- Administration and sales travel and entertainment
Administrative overhead is considered a period cost; that is, the benefit of this type of cost does not carry forward into future periods.
Administrative overhead is also known as general and administrative overhead.