Administration overhead refers to indirect costs incurred for managing and controlling a business, which are not directly related to production or sales.

Simple Meaning:

They are general office and management expenses needed to run the business.

Examples:

Office salaries

Office rent

Electricity and water charges

Office stationery

Audit and legal fees

Depreciation of office equipment

Nature:

Indirect costs

Usually treated as period costs

Shown in the Profit and Loss Account

In short, administration overhead includes the general expenses required to manage a company’s daily operations.