Utah Contractor Practice Exam 2025 - Free Contractor License Practice Questions and Study Guide

In construction, overhead costs refer to expenses that are not directly tied to a specific project but are necessary for the operation of the business as a whole. These costs can include things like rent, utilities, and advertising, all of which contribute to the overall functioning of the company.

Rent is considered overhead since it is a recurring cost associated with the physical space needed for business operations. Utilities also fall under overhead, as they are essential services that sustain the operation of the business premises. Advertising costs are viewed as overhead because they are necessary for promoting the business and acquiring new projects.

Storage costs, however, can often be assigned directly to a project, especially if the storage is for materials and equipment specific to a job. Since these costs can be variable and project-specific, they are not typically classified as overhead in the same way that rent, utilities, and advertising are. Therefore, the classification of storage as not being overhead aligns with the understanding of how various costs are categorized in construction.