Which item would be considered contractor overhead?

Which item would be considered contractor overhead?

• A. Salaries for the contractor's marketing team
• B. A leased large format copy machine at the home office
• C. Project binders and file folders
• D. Business licensing fees

Answer: (A)

Overhead covers costs that keep the business running and support work without being tied to a specific project. Salaries for the contractor’s marketing team fit this because they fund business development and general operations for the firm as a whole, not deliverables on any one project. The other items are more directly tied to project delivery or are routine office expenses rather than clear, non-project-specific staff costs: project binders and file folders are consumed for a particular project, making them direct project costs; the copy machine is a shared office asset whose cost is typically allocated in ways that aren’t as cleanly overhead; licensing fees are ongoing admin costs. The marketing salaries clearly illustrate the overhead category.

Overhead covers costs that keep the business running and support work without being tied to a specific project. Salaries for the contractor’s marketing team fit this because they fund business development and general operations for the firm as a whole, not deliverables on any one project. The other items are more directly tied to project delivery or are routine office expenses rather than clear, non-project-specific staff costs: project binders and file folders are consumed for a particular project, making them direct project costs; the copy machine is a shared office asset whose cost is typically allocated in ways that aren’t as cleanly overhead; licensing fees are ongoing admin costs. The marketing salaries clearly illustrate the overhead category.