In cost accounting, overheads are those indirect expenses which are used for operating production. In overheads we can not include direct material, direct labor and direct expenses. Rent of plant, electricity bill of factory, salary of office employees, taxes, telephone bills, supplies, repairs and legal fees are overheads.
Overheads comprise of indirect materials, indirect employee costs and indirect expenses which are not directly identifiable or allocable to a cost object in an economically feasible way.