OPERATING EXPNSES

Third main part of a profit and loss account of a merchandising company . These expenses other than cost of goods sold, interest and income tax , and are incurred in running the normal business of a company Operating expenses can be a significant part of the costs of doing business. For example , in 2002 coca-cola company and its worldwide subsidiaries spent $7 billion on selling and administration out of their revenues of nearly $20 billion An operating expense, operating expenditure, operational expense, operational expenditure is an ongoing cost for running a product, business, or system. Its counterpart, a capital expenditure , is the cost of developing or providing nonconsumable parts for the product or system 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 a real estate context, operating expenses include costs associated with the operation and maintenance of an income-producing property. These expenses are often grouped into useful categories such as : 1) Selling expenses and 2) Administrative expenses. 1) Selling Expenses Include expenses of storing and preparing goods for sale , promoting sales, and delivering goods to customers. Examples includes salaries , commission , and travelling expenses of sales staff , advertising charges , and delivery expenses

2) Administrative expenses . Incurred in the overall management of a business Include expenses on salaries , rent, telephone, and depreciation pertaining to head office, accounting, and personnel function. Operating expenses include: Selling expenses Sales salaries and commission Advertising Freight out Store rent Sales discount Depreciation expense , store furniture Total selling expenses Administrative expenses Office salaries Insurance Rent Depreciation expenses , office equipment Total administrative expenses Total operating expenses Net profit/loss xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx