Operating cost is one of the items of cash flow statement in project evaluation, and it is the total cost of the enterprise after deducting depreciation expenses of fixed assets and net interest expenses of working capital. Operating costs do not include depreciation expenses and interest expenses of fixed assets. Operating costs do not include depreciation expenses, amortization expenses and loan interest expenses. Operating cost refers to the total cost of a construction project after deducting depreciation, amortization and financial expenses.
The operating costs of selling products, commodities and providing services are composed of production and operating costs. The composition of product production cost (also called manufacturing cost) of industrial enterprises mainly includes:
1. Direct materials
Direct materials include raw materials, auxiliary materials, spare parts, outsourced semi-finished products, fuel, power, packaging and other direct materials actually consumed in the production and operation of enterprises.
2. Direct salary
Direct wages include wages, bonuses, allowances and subsidies for personnel directly engaged in product production in enterprises.
3. Other direct expenditures
Other direct expenses include employee welfare expenses of personnel directly engaged in product production.
4. Manufacturing cost
Enterprises can make appropriate adjustments to the cost structure according to their own needs.
Extended data:
Operating cost refers to the expenses incurred by an enterprise in its main business activities. The costs of real estate development enterprises include: land transfer costs, commercial housing sales costs, supporting facilities sales costs, settlement costs of construction projects, operating costs of leased products, etc. If it is the office expenses of sales, of course, it should be recorded in the cost of sales, and the sum of these items should enter the operating cost in stages or at one time.
Operating cost in engineering economy: Operating cost is a specific concept used in project evaluation. As the main cash outflow during the operation period of the project, its composition and estimation can be expressed as: operating cost = purchased raw materials, fuel and power costs+wages and welfare expenses+repair expenses+other expenses, and other expenses refer to the surplus after deducting depreciation expenses, amortization expenses, repair expenses, wages and welfare expenses from manufacturing expenses, management expenses and sales expenses.
Resources Baidu Encyclopedia: Operating Costs