Operating Expense Excel Template

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Let us take the example of a manufacturing company to illustrate the computation of operating expenses. According
to the latest annual report, the following information is available from the income statement of the company:

Particulars Amount (in million)

Sales Commission $1.20
Advertising Expense $2.00
Salaries $1.00
Depreciation $0.75
Rent $0.50
Utilities $0.30

Operating Expense is calculated using the formula given below

Operating Expense = Sales Commission + Advertising Expense +
Salaries + Depreciation + Rent + Utilities

Operating Expense $5.75

expenses. According
the company:
Let us take the example of a company to illustrate the computation of operating expenses using
the alternate approach. The following financial information is available about the company:

Particulars Amount (in million)

Revenue $40.00
Direct Labor $5.25
Raw Material Cost $9.75
Manufacturing Overhead $1.25
Net Income $6.00
Interest Expense $2.00
Taxes $2.50

COGS is calculated using the formula given below

COGS = Direct Labor + Raw Material Cost + Manufacturing Overhead

COGS $16.25

Operating Income is calculated using the formula given below

Operating Income (EBIT) = Net Income + Interest Expense + Taxes

Operating Income $10.50

Operating Expense is calculated using the formula given below

Operating Expense = Revenue - Operating Income - COGS

Operating Expense $13.25

Let us take the example of Apple Inc. to illustrate the computation of operating expenses using both
approaches. According to an income statement for 2018, the following information is available:

Particulars Amount (in million)

Revenue $265,595
Cost of Sales $163,756
Research and Development $14,236
Expense
Selling, General and $16,705
Administrative Expense
Operating Income (EBIT) $70,898

First Approach

Operating Expense is calculated using the formula given below

Operating Expense = Research and Development Expense +
Selling, General and Administrative Expense

Operating Expense $30,941

Alternate Approach

Operating Expense is calculated using the formula given below

Operating Expense = Revenue - Operating Income - Cost of Sales

Operating Expense $30,941