Operating expenses, also known as selling, general and administrative expenses (SG&A), are the fixed costs your business incurs that are not directly related to production.
For example, a distribution company with $2 million in revenue reports $600,000 in operating expenses — including $250,000 in sales salaries, $150,000 in rent, $80,000 in marketing, and $120,000 in general and administrative costs — resulting in an operating profit of $400,000 before interest and taxes.
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