How to calculate the total running costs of an operational unit?

In the case of a device, component, piece of equipment or facility (for the rest of this article, all of these items will be referred to in general as equipment), it is the regular, usual and customary recurring costs of operating the equipment. This does not include the capital cost of constructing or purchasing the equipment (depending on whether it is made by the owner or was purchased as a constructed system).

Operating costs are incurred by all equipment — unless the equipment has no cost to operate, requires no personnel or space and never wears out (any examples? perhaps intangibles, though not equipment, per se). In some cases, equipment may appear to have low or no operating cost because either the cost is not recognized or is being absorbed in whole or part by the cost of something else.

Equipment operating costs may include:

• Salaries or Wages of personnel
• Advertising
• Raw materials
• License or equivalent fees (such as Corporation yearly registration fees) imposed by a government
• Real estate expenses, including
  • Rent or Lease payments
  • Office space rent
  • furniture and equipment
  • investment value of the funds used to purchase the land, if it is owned instead of rented or leased
  • property taxes and equivalent assessments
  • Operations taxes, such as fees assessed on transportation carriers for use of highways
• Fuel costs such as power for operations, fuel for production
• Public Utilities such as telephone service, Internet connectivity, etc.
• Maintenance of equipment
• Office supplies and consumables
• Insurance premium
• Depreciation of equipment and eventual replacement costs (unless the facility has no moving parts it probably will wear out eventually)
• Damage due to uninsured losses, accident, sabotage, negligence, terrorism and routine wear and tear.
• Taxes on production or operation (such as subsidence fees imposed on oil wells)
• Income taxes

Some of these are not applicable in all instances. For example,

• A solar panel placed on one's home for use in generating electric power generally has only capital costs; once it's running there are no personnel costs, utility costs or depreciation and it uses no extra land (that wasn't already part of the place where it is located) so it has no real operating costs; however there may need to be taken into account costs of replacement if damaged.
• An automobile or any other item purchased for personal use has no salary cost because the owner does not charge themselves for operating the device.
• An item which is leased may have some or all of these costs included as part of the purchase price.

It might be questionable to assert that the cost of ten extra people on the sales force are an incremental cost or an overhead cost, since the wages for these people are both overhead and incremental. The staff needed to keep the shop operational are mostly considered overhead.

• formula for operating cost = total cost* number of weeks