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His math skills suck by Tansin A. Darcos (TDARCOS) 02/02/2012, 12:24pm PST
He's intermixing sunk costs, capital costs, opportunity costs and G&A together and claiming the entire cost is the cost of the single usage. All of the non-overhead cost is supposed to be averaged out over the entire expected lifespan of the item in question.

By this sort of logic, I go to Target and buy an electric grill. It cost me, say, $3 in bus fare plus the $24 for the grill, and I make a batch of pancakes. I get 4 pancakes out of the 1 cup of pancake mix, so each of the pancakes costs me $6.

He doesn't use his camera once to take the picture. He isn't using Photoshop once for this picture then erasing it. He isn't tossing his computer after taking the picture, thus the sunk costs of his camera, his lenses, the software, the computer are all supposed to be apportioned over the entire collection of photos. So if he takes 10-12,000 photos he could allocate, say, 20c per photo for overhead.

If I have to buy a car to go to work, it doesn't cost me $1500 the day I drive it home, that's the capital cost of acquiring it, and is apportioned over the entire time I have it. Same for the $300 a month the purchase costs, it should be allocated to $10 a day in overhead, not presumed the first time I use it during the month that trip costs $300. This is what we call "G&A" - General overhead and Administrative costs; in a business, this is the costs you have for operating such as office expense, and you apportion a little on every contract

When you buy something at Target, Safeway, K-Mart, Sears, Dollar Tree, Dollar General, Walgreens, CVS, Rexall, King Soopers, Ralphs, Giant, Vons, Jewel, ACME, Alpha Beta, Albertsons, Best Buy, Staples or Home Depot, they probably have an overhead of about $1,000 a day just to run the store not including payroll. Utility, rent or mortgage, property taxes, depreciation, all come together, and to cover that, they tack on about 1-2c per item. Payroll might add another 1/2c-50c per item depending on the price of the item. Profit for the store might be calculated by raising the wholesale price of everything by about 7%. So the store's overhead means you pay 25c more for a can of Chiili, a box of light bulbs or a package of bolts, a buck more on a tool kit or a loaf of bread, $10 more on a $300 drill press, depending on what type of store it is. They would not try to claim the first customer pay all of that day's overhead. Nobody would do it, of course, and more importantly, cost averaging is the correct way to apportion overhead and sunk costs, by apportioning it a little on everything.

Some of these costs have to be spent just to be in the line of work you're in, so they're overhead and you apportion them accordingly. But presuming the entire cost is apportioned to a single use is a dishonest accounting trick. It's one of those things record companies and motion picture studios do. A studio might spend $5 million on advertising promoting 10 films, and might charge that $5 million to all of the films (which is dishonest) or splitting it among all of them (okay, but allows popular films to subsidize less popular ones.) Record companies use G&A to cheat artists by charging them for costs on a record production, then charging studio overhead, instead of apportioning overhead evenly to everything as a part of costs. Which is why most artists don't make a dime from a record contract, if anything the record company claims they owe money.

This guy would fit in perfectly at a record company or a movie studio.
PREVIOUS REPLY QUOTE
 
This man is an imbecile. by laudablepuss 01/06/2012, 1:22pm PST NEW
    My car is worth a billion dollars! NT by Entropy Stew 01/06/2012, 1:28pm PST NEW
        Please include the cost of building Detroit in the replacement value by laudablepuss 01/06/2012, 1:32pm PST NEW
            Cost of Columbus' voyage (adjusted for inflation) NT by motherfuckerfoodeater 01/06/2012, 2:01pm PST NEW
    What's wrong with it? NT by Gutsby 01/06/2012, 2:06pm PST NEW
        I have several objections. by laudablepuss 01/06/2012, 2:54pm PST NEW
            Semi-professional photographers. by Gutsby 01/06/2012, 3:30pm PST NEW
                Watermarked or low rez version online + "interested in purchasing this photo?" NT by Fullofkittens 01/06/2012, 5:40pm PST NEW
                    Yes, I wish everything was a dumb soulless machine too. NT by Gutsby 01/06/2012, 11:18pm PST NEW
        post for post the most obtuse poster here NT by grats ding 01/06/2012, 7:18pm PST NEW
    Who says you can't pay writers in "exposure?" NT by Arianna Huffington 01/06/2012, 6:10pm PST NEW
    His math skills suck by Tansin A. Darcos (TDARCOS) 02/02/2012, 12:24pm PST NEW
 
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