University of Maryland Extension

Fixed/Overhead expenses

Author: 
Dale M. Johnson, Extension Specialist, Farm Management


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You incur some fixed/overhead expenses that are not directly associated with the amount of agricultural products you produce. For example, expenses like property taxes, insurance, loan interest, utilities, and office supplies do not vary with the amount of crops and livestock produced. These are often fixed at a certain amount.

Some expenses may be both operating and overhead. For example, if you hire labor on an hourly basis and it fluctuates according to needs of production, then it is a variable/operating expense. If you have salaried employees that get a fixed wage, then it is a fixed/overhead expense.

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Depreciation

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