Are operating expenses same as indirect expenses? If not, what's the difference?
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Answer:
There are two main categories of expenses that a business can incur: overhead and operating expenses. Operating expenses are those that a business incurs as a result of its normal operations. Overhead expenses, on the other hand, are what it costs to run the business.
Expenses can be divided into several different types, including equipment costs, inventory, and facilities costs. These business expenses can be further divided into overhead or operating costs, each of which depends on the nature of the business being run.
KEY TAKEAWAYS
Operating expenses are the result of a business's normal operations, such as materials, labor, and machinery involved in production.
Overhead expenses are what it costs to run the business, including rent, insurance, and utilities.
Operating expenses are required to run the business and cannot be avoided.
Overhead expenses should be reviewed regularly in order to increase profitability.
Operating Expenses
Operating expenses are incurred by a company through its normal business operations. That means these expenses are required and cannot be avoided because they help the business continue running. Operating expenses are also referred to as opex.
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