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Types of Operational Costs Affecting Business Profit and Loss

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Types of Operational Costs Affecting Business

Operational expenses are all expenses incurred by the company to carry out its daily business activities. You need to know first to avoid business losses and wasted operational costs.

What is included in operating costs? Come on, read a full explanation of the types of operational costs in this article.

Do General Expenses Include Operational Costs?

Because operational costs include various costs incurred by the company to support the smooth running of its business, of course, general costs are also included as operational costs.

This is because general costs are all company expenses to support producing goods and services so that they have value and can be sold for the company’s profit. General costs here are calculated for both those that have occurred and those that will occur.

What is Included in Operational Costs?

In addition to general costs, costs are included in operational costs, namely administrative costs and marketing costs (costs related to sales). So, so that nothing is missed, all costs included in this operational cost must be properly recorded.

Usually, the recording is also separate from non-operational costs so that at the end of the period, the company can determine whether its business activities have made a profit or loss. To be clearer, see the full description below.

What are the Operational Costs?

Administrative Fees and General Fees

1. Labor Income

Providing income to workers is, of course, the company’s obligation. In other words, all expenses to pay for labor are included in administrative costs and general costs.

For example, employee salaries, incentives, overtime pay, bonuses, income taxes, and even honorary wages. Especially for honorary wages, not all companies pay this fee.

Usually, honorary payments are made to cleaning service officers, security officers, doorkeepers, field workers, daily billing officers, and others.

2. Employee Welfare

Employees whose welfare is guaranteed will contribute greatly to the company’s progress. For this reason, many companies provide special funds for employee welfare.

For example, company employee recreation funds, health benefits, Employment BPJS, insurance, training, etc.

3. Maintenance and Repair Costs

Maintenance and repair costs are included in administrative costs and general costs. Because, of course, a damaged production machine can’t be used, right?

That’s why there are routine maintenance costs for production equipment and machinery, building maintenance, maintenance and maintenance of transport fleets, purchasing stationery and offices, renovating factories or warehouses, and many more.

4. Depreciation Cost

Depreciation costs also need to be calculated properly because even though the nominal amount is sometimes small, for example, one pen that is lost and has to be bought again will affect the company’s cash outflow.

Generally, those included in this category include printing costs, purchases of stationery and office supplies, electricity, telephone, and water costs. Even the depreciation costs for printers, work desks, and air conditioners in the office are included in this depreciation cost.

Marketing Expenses

In addition to administrative and general costs, marketing costs are also included in operational costs. This is because marketing is the spearhead that determines business development in the future.

If marketing is not going well, then production is, of course, useless. So, here are some costs that are included in the marketing costs group.

1. Administrative Fees for Marketing Force

Administrative costs for marketing personnel for each company can vary, depending on the marketing techniques applied.

Generally, however, these costs include salaries, sales incentives, bonuses, business travel expenses for marketing purposes, and advertising costs.

Marketing costs can be further divided into fixed costs (base salary of marketing staff, shopkeeper salary, warehouse depreciation) and variable costs (advertising costs, packing costs, and shipping costs).

What are the Operational Costs?

2. Expenses Related to Advertising, Exhibition, Printing Brochures

The costs included in this group are all costs that support the company in getting orders and making sales happen.

For example, advertising and promotion costs, billboards, brochures, banners, shop employee uniforms, telephone costs for the telemarketing department, and others.

3. Warehouse Storage and Management

After the production process is complete and becomes finished goods, companies need a place to store all these finished goods before being distributed to the market.

Of course, its operations require various costs, such as storage costs and warehouse management. They also need maintenance, care, repairs, and warehouse depreciation costs.

4. Packing and Shipping

The cost of packing and shipping the product also goes into the marketing budget group. Examples are packing and packaging costs, purchase of equipment and raw materials (plastic, adhesive tape, boxes) for packing, transporting goods, and shipping costs.

5. Cost of Credit and Sales Administration

There are also credit costs associated with receivables and bills of sale. At the same time, sales administration costs are all costs required by the sales team that is not directly related to sales activities.

Examples of costs for this category include billing clerk salaries, purchasing stationery and office equipment for the sales administration department, depreciation costs for printers and printing machines, telephone, water, and electricity costs for the administration department, and so on.

You know, calculating all expenses in business operational activities is important to do it carefully. In addition to preventing losses, it can also avoid waste. Then how to calculate it? Come on, study here: How to Calculate Operational Costs?

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