by patrick on Thu Jun 19, 2008 10:08 pm
I'm a financial analyst and this is how I look at this topic. The GTO had the nickname of Gas, Tires and Oil.
GAS
This is the easy part of the equation. The gas price should be shared by all parties. Take the cost and divide by number of vehicle occupants and you arrive at the fuel cost per person.
TIRES AND OIL
These are forgotten costs and only arise when you have the work done at the service station. The true cost may be about 20 cents per mile, but it should be SHARED by all, not CUMULATIVE per person. In economic terms, this is called a positive externality. If I turn on the radio, everyone can hear it. An example of a negative externality would be the front row of a concert standing up, forcing row two to do the same, and then everyone stands.
Therefore, what I'm doing for my Sapelo trip is looking at number of attendees AND number of cars. You need to make TWO computations, one for gas, the other for the tires and oil.
In accounting terminology, one is a variable cost while the other is a fixed cost. This is why companies run 24/7, because once they hit their break even point (cover the fixed cost) all else will become profit (assuming you sell for more than your variable cost).
So in essence, Denise is right and wrong. She lost money for refusing ALL of the tires and oil, but had she accepted money from everyone, she likely would have profited beyond the break even point.
Get it??
Patrick
Trip Leader
AOC member number 4