Please help solve tommy has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $100,000. The old machines presently have a book value of $60,000 and a market value of $6,000. They are expected to have a five-year remaining life and $1,000 salvage value. The new machines would cost the company $50,000 and have operating expenses of $10,000 a year. The new machines are expected to have a five-year useful life and $6,000 salvage value. The operating expenses associated with the old machines.

An operating expense, operating expenditure, operational expense, operational expenditure, or opex is a cost that is incurred on a regular basis when a product, business, or system is operated. A capital expenditure, on the other hand, is the expense of developing or providing non-consumable pieces for the product or system.

The continual expenses incurred by the routine day-to-day operations of a business are referred to as operating costs. Running expenses comprise both costs of goods sold (COGS) and other operating expenses, which are sometimes referred to as selling, general, and administrative (SG&A) expenses.

There are three types of operating expenses: office, compensation, and sales and marketing-related expenses. Office-related expenses are incurred in conventional office environments and frequently include items such as office supplies, property taxes, rent, and insurance.

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