Bureaucracy fees. They go to secretaries, senior executives, managers who don't produce anything, and other easily-disposed-of gadflies who are involved in the oversight of projects, and are easily expendable.
Administrative expenses also include more things the customer doesn't really care about, like legal costs, rent, insurance, government filing papers, and other things all periphery to the eventual product delivered to the customer, which they pay for expecting greatness in every Whoopee Cushion.
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Finance: What is overhead?14187 Views
finance a la shmoop. what is overhead? it's a bird it's a plane it's Shmooperman!
yeah okay we couldn't resist. any on its overhead but has nothing to do with [man wearing cape flies across the sky]
overhead. alright your company is slink Inc. you make yes of course slinkys. they
walk downstairs a loner in pairs and make a slinkity sound.
yeah those. your primary costs in making them are miles and miles and miles of
flattish wire that kind of smells funny. and then a twisty machine thing then you
heat them up so they remain in that slinky shape forever and well you're
pretty much. done sorta. you've made the product but like where does that product
to live? well you store it here in the slinky condo birthing chamber and you [slinky in a log cabin]
have to rent the warehouse where all of these things live until they get shipped
off to you know the good boys and girls and men with midlife crises all around
the world. all right well that rent is overhead. the shipping of the product
overhead. insurance you need to maintain so that if a slinky drops on someone's
head and spins their hair all around they have to shave or at least that's
the reason we're giving for our baldness at home. that insurance overhead. the
lawyers who had to defend that a head case yep overhead. overhead is basically
everything that isn't directly useful at least in getting a product built and
bought. and it's usually a fixed cost meaning that you can't usually get rid
of overhead no matter how hard you try. like rent lawyers insurance yeah go
negotiate with them. they charge what they charge each month and there's just
not a whole lot you can do about it even if you want it to. oh and the CEO of the [woman throws stacks of cash on a desk]
company the one who meets with Wall Street people and shakes hands with the
people at Amazon well she's overhead. - yeah they really
should put a warning on those things. [man frowns]
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