Operational costs are a number of costs that must be incurred so that the production process or company activities can move continuously.
Thus, of course we can say, that all companies will incur this cost.
Operational costs themselves are often referred to as sacrifice costs. And usually, written in the form of units of money.
In addition to the definitions above, there are several other meanings, starting from the definition according to Wikipedia to the experts.
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Definition of Operational Costs
Discussion of operational costs is a basic matter of operational management that you must understand. Especially for those of you who are already planning to enter the business world.
Here are some definitions that you must understand.
According to Wikipedia
According to Wikipedia, operational costs are costs that must be incurred on an ongoing basis. This is so that the production process runs smoothly.
The cost of production itself will be closely related to the company’s development capital expenditure. Or providers of components that cannot be produced.
According to Jusuf (2007)
Jusuf (2007) states, operational costs are all costs that are not directly tied to the company’s products. But related to the company’s operational activities every day.
According to Nafarin (2000)
Meanwhile. Nafarin believes that operational costs are the main costs of a company besides the cost of goods sold. Its business costs include administrative costs, sales, and general expenses.
Apart from this understanding, you will also be in contact with non-operational costs. Where, the two have quite striking differences.
Non-operational costs themselves are costs for things that are outside the company’s activities, but are still borne by the company.
Even though its nature is not related to the company’s main activities, non-operational costs remain a mandatory responsibility of a company.
This is so that the company still has the best support system in carrying out its various activities.
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Examples of non-operating costs are donation costs, sales losses, bank administration, natural disaster losses, and so on.
Simply put, costs included in operations are costs related to production activities, while non-operational costs are the opposite.
Both cases are actually simple things for those who are used to it.
However, for lay accountants, of course there is no difficulty in determining both.
What’s more, the costs between one company and another are definitely very different.
Because usually, there are several cases. For example, cost A is included in operational costs, while B is included in non-operational costs. So, there could be different enforcement in other companies.
For this reason, large companies often carry out segregation using bookkeeping application technology . As a good accountant, you must complete financial records according to company activities
This is so that the outgoing financing can be known properly. Which are included in operational costs, and which are included in non-operational costs.
So, categorizing costs is very important. Thus, management will find it easier to coordinate incoming and outgoing flows.
In addition, this grouping can also be used as a guide in making strategies and decisions in the future.
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Types of Cost Components
Knowing and understanding the cost components is very important.
So that the grouping of the two costs becomes easier and more focused.
If you are still confused, consider the components in the following two.
Operating costs
In general, its components consist of fixed costs, variable costs, interest and depreciation.
As mentioned above, operational costs are the most important component and must receive special attention.
The simple formula is, when the costs in a company or business are getting smaller, the profits will also be getting bigger. However, the calculation and classification of operational costs for each company will certainly be very different.
And cannot be generalized. Thus, making comparisons between the operational costs of one company and another is not the right thing.
Except, the company is engaged in the same field. The following are some of the components in operational costs.
1. Fixed Costs
Fixed costs are costs that do not change even though there is an increase in sales and production. The cost though incurred, without assessing the condition of the company.
For example, employee salaries, industrial machine maintenance, warehouse rent, and insurance costs. For this one operational cost component, of course almost all companies are the same.
Apart from that, there are also operational costs in the call center for customers or company partners. Corporate communications can be well integrated from chat or telephone with cloud telephony applications.
2. Variable Costs
Meanwhile, variable costs are costs that depend on the company’s activities. These costs can increase if the amount of production also increases. And vice versa.
Where, when production decreases, costs will also decrease. For example, shipping costs with raw materials.
3. Depreciation costs
Depreciation expense is a value that will continue to disappear or decrease every month. This is due to use or usage. The simplest example is office equipment with production machines.
4. Interest Costs
The next one is the interest expense. Interest costs that must be incurred by the company due to debts that must be paid regularly. For example, unpaid balances and credit card interest.
Non-Operating Costs
When compared with operational costs, we can say that these non-operational costs are relatively small. Nevertheless, its existence still cannot be underestimated.
Because he still influences a company. For example, the cost of transfers between banks. So, every company still has to pay attention to non-operational costs. Complete with components inside.
At least, there are three components of non-operational costs. Namely the cost of renting goods or assets, loan interest costs, and also the cost of losses on the sale of property.
1. Rental fees for borrowing goods or assets
The cost of renting goods or assets is a cost that must be paid by the company to other parties as a loan item. Either in the form of goods or property.
Why is it included in non-operational costs? Because of its unstable nature. In a sense, the company does not have to incur costs every time.
2. Loan Interest Costs
The other component is the interest cost of the loan. Loan interest costs are costs that must be paid by the company to other parties, namely to the Java provider of loan funds.
It’s the same with the cost of renting goods or assets. Where, this fee does not have to be paid regularly.
3. Cost of Losses on the Sale of Assets
The last component of non-operating costs is the cost of loss or sale of assets. These losses are costs that must be borne by the company, due to the sale of assets or others.
For example, office equipment that cannot be used. Thus, there is such a thing as the difference in purchase costs. This difference is included in the cost of loss.
This component also applies to other costs which are potentially detrimental. For example, losses, natural disasters, currency exchange rates, and so on.
The use of online accounting software should speed up and facilitate the process of recording costs and transactions in the company.