Applied Cost

  

Categories: Accounting, Tax

You don't know the actual cost, so you're making one up. You're applying your creativity. Think: car mileage. You have no idea what it actually costs you to drive your 1997 Ford Taurus the 22 miles back and forth to work everyday. You bought it. You have gas, maintenance, insurance, and a ticket every month or two.

So you make up a per mile cost (Okay, we'll be generous...you estimate a cost) and apply that metric when you seek that deduction on your taxes.

Related or Semi-related Video

Finance: What Does "Per Capita" Mean?1808 Views

00:00

finance a la shmoop. what does per-capita mean? well there's poor capita yeah this

00:09

guy, how would you like to be named capita and then there's per capita which [man sits under a tree]

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just means well technically per head. yep comes from Latin like oh so many

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things salsa dressing and dancing among others, the word decapitation comes to [dancing feet]

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mind. like what happens when those flying human taxi drones get too far to the

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left or when King Henry got tired of a wife. so if that happened often it had [helicopter prop]

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throw off the per capita calculations. and same deal if we suddenly had a lot

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of two-headed people being born like the aliens in men in black and whole bunch

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other Hollywood movies. per capita is a useful metric in a bunch of financial

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calculations. a common set is GDP or gross domestic product per capita .like

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if you have a ton of GDP say ten trillion dollars from your country [100 dollar bill]

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whateverstan, if you only have a million people that's a ton of production

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productivity. but if you're say China with well over a billion people well

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then it's a much lower GDP per capita. the calculations get quoted when talking

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about things like cell phone monthly subscriptions, computer ownership or [people crowd around a cell phone]

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particularly rollicking house parties. so yeah the notion of per capita is pretty

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important but don't stress if you're not an expert yet. it's a nothing to lose

01:33

your head over. [man carries head]

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