An operating expense, operating expenditure, operational expense, operational expenditure
or OPEX is an ongoing cost for running a product, business, or system. Its counterpart, a capital
expenditure, is the cost of developing or providing non-consumable parts for the product
or system. For example, the purchase of a photocopier involves CAPEX, and the annual
paper, toner, power and maintenance costs represents OPEX. For larger systems like businesses,
OPEX may also include the cost of workers and facility expenses such as rent and utilities.
In business, an operating expense is a day-to-day expense such as sales and administration,
or research & development, as opposed to production, costs, and pricing. In short, this is the
money the business spends in order to turn inventory into throughput.
On an income statement, "operating expenses" is the sum of a business's operating expenses
for a period of time, such as a month or year. In throughput accounting, the cost accounting
aspect of the theory of constraints, operating expense is the money spent turning inventory
into throughput. In TOC, operating expense is limited to costs that vary strictly with
the quantity produced, like raw materials and purchased components. Everything else
is a fixed cost, including labour. In a real estate context, operating expenses
include costs associated with the operation and maintenance of an income-producing property.
Operating expenses include: accounting expenses
license fees maintenance and repairs, such as snow removal,
trash removal, janitorial service, pest control, and lawn care
advertising office expenses
supplies attorney fees and legal fees
utilities, such as telephone insurance
property management, including a resident manager
property taxes travel and vehicle expenses
Travel expenses are defined as those incurred in the event of travel required for professional
purposes. For this purpose, “travel” is defined
as the simultaneous absence from the residence and from the regular place of employment.
It is prompted by professional or company purposes and likely does not concern the traveller’s
private life, or concerns it only to a small degree. Travel expenses include travel costs
and fares, accommodation expenses, and so-called additional expenses for meals. For the self-employed,
the expenses constitute business expenses.
leasing commissions salary and wages
See also Capital expenditure
Total cost of ownership Capital budgeting
Freight expense Operating cost
References
Further reading Harry I. Wolk, James L. Dodd, Michael G. Tearney.
Accounting Theory: Conceptual Issues in a Political and Economic Environment. ISBN 0-324-18623-1.
Angelico A. Groppelli, Ehsan Nikbakht. Finance. ISBN 0-7641-1275-9.
Barry J. Epstein, Eva K. Jermakowicz. Interpretation and Application of International Financial
Reporting Standards. ISBN 978-0-471-79823-1. Jan R. Williams, Susan F. Haka, Mark S. Bettner,
Joseph V. Carcello. Financial & Managerial Accounting. ISBN
978-0-07-299650-0.1 Goldratt, E. M., & Cox, J.. The Goal: A Process
of Ongoing Improvement. ISBN 978-0-88427-178-9. http:www.diffen.comCapex_vs_Opex