Operating costs are incurred by all equipment - unless the equipment has no cost to operate, requires no personnel or space and never wears out. This does not include the capital cost of constructing or purchasing the equipment (depending on whether it is made by the owner or was purchased as a constructed system). In the case of a device, component, piece of equipment or facility (for the rest of this article, all of these items will be referred to in general as equipment), it is the regular, usual and customary recurring costs of operating the equipment. It includes all operating cost such as salary, rent, stationery, furniture etc. Selling and distribution expenses like advertisement, salaries of salesmen.Administrative and office expenses like rent, salaries, to staff, insurance, directors fees etc.Operating Cost is calculated by Cost of goods sold + Operating Expenses. Non-overhead costs are incremental such as the cost of raw materials used in the goods a business sells. cost of electricity for the office lights.payment of rent on the office space a business occupies. Overhead costs are usually measured in monetary terms, but non-monetary overhead is possible in the form of time required to accomplish tasks. Overhead costs for a business are the cost of resources used by an organization just to maintain its existence. semi variable, the expenses necessary to keep the business in proper condition.Variable Costs include indirect overhead costs such as Cell Phone Services, Computer Supplies, Credit Card Processing, Electrical use, Express Mail, Janitorial Supplies, MRO, Office Products, Payroll Services, Telecom, Uniforms, Utilities, or Waste Disposal etc. It may be more or less expensive to use overtime production depending on whether faster production means the product can be more profitable). variable costs, which may increase depending on whether more production is done, and how it is done (producing 100 items of product might require 10 days of normal time or take 7 days if overtime is used.These generally have to be paid regardless of what state the business is in. Fixed Costs include items such as the rent of the building. fixed costs, which are the same whether the operation is closed or running at 100% capacity.They are the cost of resources used by an organization just to maintain its existence.įor a commercial enterprise, operating costs fall into three broad categories: Operating costs or operational costs, are the expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility. Expenses which are related to the operation of a business, equipment or facility
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