Connecticut Barber Licensure Practice Exam

What does the term 'overhead' refer to in a business context?

1. Profit margins

2. Operating Expenses

3. Net income

4. Revenue

The correct answer is: Operating Expenses

"Overhead" in a business context refers to the ongoing expenses incurred in order to keep a business operating, such as rent, utilities, and salaries. These expenses are necessary for the day-to-day functioning of a business, but they do not directly contribute to the production or delivery of a product or service. The profit margin (option A) is the difference between a company's revenue and its expenses, so it would not be considered overhead. Net income (option C) is the total amount of money a company earns after all expenses, including overhead, have been subtracted from revenue. Revenue (option D) is the total amount of money a company earns from the sale of its products or services, and it does not take into account any overhead expenses. Therefore, option B is the most accurate choice for what the term "overhead" refers to in a business context.