Enter the salaries, sales commission, advertising cost, rental expense, and utilities into the calculator to determine the operating expense.

Operating Expense Formula

The following formula can be used to calculate the operating expense of a business.

OE = S + C + A + R + U

  • Where OE is the operating expense
  • S is the total salaries
  • C is total commissions
  • A is the advertising cost
  • R is the rental or building cost
  • U is utilities

Operating Expense Definition

An operating expense is a total cost associated with the operational portion of the cost of a produced good or service. These operational expenses include the 5 things listed above.

Operating Expense Example

How to calculate operating expense?

  1. First, determine the total salaries.

    Calculate the total cost of all salaries.

  2. Next, determine the advertising cost.

    Calculate the cost of advertising associated with the product.

  3. Next, determine the total commissions.

    Calculate the total commissions on all sales.

  4. Next, determine the building cost and utilities.

    Calculate the cost to own or rent the building the company is in as well as the utilities used.

  5. Finally, calculate the operating expense.

    Calculate the operating expense using the equation above.

FAQ

What is operating expense?

Operating expense is a measure of all expenses that are not direct labor or direct material costs that go into a product.

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operating expense formula