What is overhead?

[ferriscj24]

Can anyone tell me what "overhead" means in franchise mode? In terms of vendors and everything? I see "# Sold per game" and "Overhead per game"?

Some of them the numbers sold per game are the same as the overhead, and others the overhead is much higher.

[mmorg]

Re: What is overhead?

http://en.wikipedia.org/wiki/Overhead_(business)

Took me 5 seconds to find when searching Google.

[ferriscj24]

Re: What is overhead?

Sarcasm noted. I'm Sorry.

Thanks. Just figured someone could put it into perspective for me in terms of MLB 09.

Leave it to an Indians fan...

For the record you link to a blank wikipedia page. Again...Indians fan!

[10-27-04]

Re: What is overhead?

Overhead is indirect labor and indirect materials, as well as utilities, insurance, depreciation, rent, etc. Who would ever think ACC 204 would be helpful in The Show?

Related specifically to vendors, indirect labor expenses would be a supervisor's salary or the wages of a cleaning crew. Indirect materials would be... well, I can't really think of any in vending... it would be any materials that could not be conveniently traced to the preparation and service of the foods (think lubricants or oils for equipment).

Hope that helps.

[livnlegn]

Re: What is overhead?

In layman's terms, if you own a business, overhead is the amount of money you must spend to stay in business. Excluded from that is COGS (Cost of Goods Sold), for instance inventory (a bookstore needs to have books, but this is not overhead). You have to keep the lights on, you have to pay the rent, you have to etc., etc.

You can elect to increase/decrease the overhead to a certain extent (downgrading your internet connection, not heating the place, etc.)

It's basically the number you must reach to start making profit.

[ferriscj24]

Re: What is overhead?

Thank you everybody for the responses. So in MLB 09 The Show terms, do I want my "overhead" to match the "# sold per game" figure? Or do I want as low as overhead as possible or as high as possible? Does this make sense?

[livnlegn]

Re: What is overhead?

I own a business.

The ideal is to have as low an overhead as possible. I pay rent, utilities, insurance, loans, etc. Once I reach that number (say $10,000) in a month (i.e. $10,000 sales by the 10th of the month), I have cleared overhead and entered into profit ($20,000 from the 11th to the 30th of the month is my profit).

You want your overhead to be low. The lower your overhead the more quickly you enter profit land.

As far as how to adjust it in the game, I'm not sure, I just ignore it and in 2013 I'm still employed.

[ImTellinTim]

Re: What is overhead?

I think you all are overanalyzing it for this game's purposes. "Overhead" in this game is simply the per unit cost of what you are selling. If you divide the overhead per game by the units sold per game it is always close to an even number. The ones where the two values are the same have a cost of 1. If you look at some of the things you are selling, you are really making a killing. I'm selling jackets that I paid $35 each for $225 apiece.

Here are the calculations from my Brewers franchise through 40 home games for bobbleheads. Note that the average number sold per game is rounded, so the numbers don't come out exactly right, but are close.

Numbers from the game:
# sold/game: 385
Overhead/game: 3859
Season income: 463170
Season overhead: 154390
Selling price: 30
Home games: 40

Calculations:
Overhead (cost) per unit: 3859/385= 10/unit (the same it costs you per unit to give away bobbleheads as a promotion)
Season Income: 40*30*385=462000
Season Overhead: 40*10*385=154000

Next year, they should call it what it is, COGS.

Can you tell I'm an accountant?