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 (capex), is the cost of developing or providing non-consumable parts for the product or system. For example, the purchase of a

photocopier A photocopier (also called copier or copy machine, and formerly Xerox machine, the generic trademark) is a machine that makes copies of documents and other visual images onto paper or plastic film quickly and cheaply. Most modern photocopiers u ...

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.

Overview

In business, an operating expense is a day-to-day

expense An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition ...

such as

sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in ...

and

administration Administration may refer to: Management of organizations * Management, the act of directing people towards accomplishing a goal ** Administrative Assistant, traditionally known as a Secretary, or also known as an administrative officer, administ ...

, or research & development, as opposed to production, costs, and pricing. In short, this is the

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money ar ...

the business spends in order to turn

inventory Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the sh ...

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 (TOC), operating expense is the

spent turning

into throughput.Goldratt, E. M., & Cox, J. "The Goal: A Process of Ongoing Improvement" (Rev. ed.). (1986)., p. 61. 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 (unless there is a regular and significant chance that workers will not work a full-time week when they report on their first day). 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 traveler’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. * leasing commissions * salary and wages

Overview

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Further reading