Utah Contractor Practice Exam

Which cost is typically classified as an overhead expense in a construction project?

1. Repair costs

2. Material costs

3. Heat and air conditioning

4. Hourly labor

The correct answer is: Heat and air conditioning

Overhead expenses in a construction project refer to costs that are not directly tied to the production of a specific project but are necessary for the overall operation of the business. Heat and air conditioning costs fall into this category because they are essential utilities that support the working environment but do not contribute directly to the construction of a specific project. These costs ensure that the workspace is comfortable and safe for workers, but they cannot be assigned directly to a particular job or site. In contrast, repair costs, material costs, and hourly labor are all directly associated with the specific activities on a construction project. Repair costs are associated with fixing equipment or structures, material costs relate to the supplies used for construction, and hourly labor covers the wages paid to workers for their time on a job. None of these are classified as overhead because they can be directly allocated to the project at hand. Thus, the classification of heat and air conditioning as an overhead expense reflects its nature as a necessary but indirect cost that supports all projects undertaken.