Overhead costs are the expenses incurred in the normal operation of a business.

• A. True
• B. False
• C. Not Related
• D. Capital Expenditures

Answer: (A)

Overhead costs are the ongoing, general expenses needed to run the business in its normal day-to-day operations. They include items like rent, utilities, administrative salaries, and other costs that keep the business functioning, even though they aren’t directly tied to producing a specific product. Because these costs arise from regular operations, the statement is true. Capital expenditures, by contrast, are investments in long-term assets such as buildings or machinery—spending that benefits the business over many years rather than the immediate period. Not Related would imply no connection to operations, which isn’t accurate since overhead exists specifically to support normal business activity.