View source for Operational cost

[[Category:Done 2016-04-30]] 
<onlyinclude>The '''operational costs''' of a firm are the costs a firm incurs during its everyday business, it does not include the [[capital]] costs of building factories but does include costs such as labor, materials, monthly lease payments, transport costs etc.</onlyinclude><ref>Investopedia. "Operating Cost." [Online], Available: http://www.investopedia.com/terms/o/operating-cost.asp [Aug 30, 2016].</ref> These costs are specifically related to the output produced by a firm.

For example, a firm that produces [[solar panel]]s has to pay for the materials to make the panels, the workers who assemble them, the [[electricity]] that powers the factory and the cost of transporting the panels to [[market]]. The cost of the factory (assuming it is owned by the firm) is not an operating cost because it is not incurred while producing the solar panels (output).

These costs are a combination of [[fixed cost | fixed]] and [[variable cost]]s. As the cost of producing output goes up (inputs such as: higher raw material or labor prices etc.) so does the operational cost, as the cost of inputs falls, so does the operational cost of a firm.<ref>A. Goolsbee, S. Levitt and C. Syverson. ''Microeconomics''. New York: Worth Publishers, 2013, pp. 85.</ref>

==See Also==
*[[Fixed cost]] 
*[[Variable cost]]
*[[Costs for a firm]]

==References==
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