C-61 Contractor License Practice Exam 2025 – Complete Study Resource

Question: 1 / 400

What term describes the costs incurred in running a business, excluding direct project expenses?

Direct costs

Fixed costs

Overhead

The term that describes costs incurred in running a business, excluding direct project expenses, is overhead. Overhead costs are the ongoing expenses of operating a business that are not directly tied to any specific project or service, such as rent, utilities, administrative salaries, and insurance. These costs are necessary to maintain the business's operations but do not directly correlate with the revenue generated from specific projects.

Understanding overhead is crucial for managing a business's finances effectively, as it helps in determining the overall profitability of projects when combined with direct costs. Managing overhead efficiently can significantly impact a company's bottom line, making it essential for contractors to account for these costs when estimating project budgets and pricing their services.

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Variable costs

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