An operating cost , operating expenses , operating expenses , operational expenses or opex are ongoing costs to run a product, business, or system. The counterpart, capital expenditure (capex), is the cost of developing or supplying a non-exhausted component to a product or system. For example, the purchase of a photocopier involves a capital expenditure, and the annual paper, toner, electricity and maintenance expenses represent opex. For larger systems such as business, opex can also include labor costs and facility costs such as rent and utilities.
Video Operating expense
Overview
In business, operating costs are daily expenses such as sales and administration, or research & amp; development, compared to production, cost, and price. In short, this is the money that businesses spend to turn inventory into throughput.
In the income statement, "operating cost" is the sum of the business operating costs for a certain period of time, such as a month or a year.
In accounting throughput, the cost accounting aspect of the constraint theory (TOC), operating costs are money spent transforming inventories into throughput. At TOC, operating costs are limited to costs that are heavily dependent on the quantity produced, such as raw materials and purchased components. Everything else is a fixed cost, including labor (unless there is a regular and significant chance that workers will not work a whole week when they report on their first day).
In the context of real estate, operational costs include costs associated with the operation and maintenance of income-generating properties.
Operational costs include:
- accounting fees
- license fees
- maintenance and repair, such as snow removal, waste removal, cleaning services, pest control, and garden maintenance
- advertise
- office costs
- inventory
- attorney fees and legal fees
- utilities, like phones
- insurance
- property management, including a resident manager
- property taxes
- travel and vehicle costs
- Travel expenses are defined as occurring on the way of travel required for professional purposes.
- For this purpose, "journey" is defined as a simultaneous absence from residence and from a regular workplace. This is driven by a professional or corporate objective and is likely not to concern the traveler's personal life, or only to a small degree. Travel expenses include travel expenses and tariffs, accommodation fees, and so-called surcharges for meals.
- rent out commissions
- salary and wages
Maps Operating expense
Other terms
- Net sales = gross sales - (discounts, returns and customer benefits)
- Gross profit = net sales - cost of goods sold
- Operating profit = gross profit - total operating cost
- Net profit = operating profit - tax - interest
- Net income = net sales - cost of goods sold - operating expenses - tax - interest
See also
- Capital expenditure (capex)
- Total cost of ownership (TCO)
- Capital budgeting
- Shipping fee
- Operating costs
- Overhead (business)
References
Further reading
- Harry I. Wolk, James L. Dodd, Michael G. Tearney. Accounting Theory: Conceptual Issues in the Political and Economic Environment (2004). ISBNÃ, 0-324-18623-1.
- Angelico A. Groppelli, Ehsan Nikbakht. Finance (2000). ISBNÃ, 0-7641-1275-9.
- Barry J. Epstein, Eva K. Jermakowicz. Interpretation and Application of International Financial Reporting Standards (2007). ISBN 978-0-471-79823-1.
- Jan R. Williams, Susan F. Haka, Mark S. Bettner, Joseph V. Carcello. Finance & amp; Managerial Accounting (2008). ISBN: 978-0-07-299650-0.1
- Goldratt, E. M., & amp; Cox, J. (1986). Purpose: Sustainable Upgrade Process (Rev. ed.). ISBN 978-0-88427-178-9.
Source of the article : Wikipedia
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