Quote Originally Posted by mapleleafalumnus View Post
I recall reading some article in the mid-1980s that the U.S. Army was spending $400 per hammer and $800 per toilet seat. I wonder if this is still the case?
Not entirely correct.
Those number only got that way due to budget allocation.

Let me explain. Suppose you have a department that is responsible for buying stuff.
As part of an imaginary contract, the department orders 1 apache helicopter and 1 hammer in a single bid. I know, this is a silly example but it allows me to show where those numbers are coming from. The total administrative overhead in paperwork and manhours is 1000$ for the total bid.

How do you allocate that overhead? Do you divide by the number of hours spent on filling in the paperwork for each item? Do you distribute it evenly based on price ratio? Do you divide it simply among the total number of items? You gotta do something because that monetary overhead has to be accounted for in the budget?

In the end, policy determines how the distribution is made. and in some cases you end up with a 400$ hammer simply because that was how the numbers worked out; not because someone actually charged 400$ for a hammer.

And in the case of the toilet bowls, those numbers usually reflect the cost to have that bowl at that particular place. And the total cost would include not only the administrative overhead, but also the cost of installing it and hooking up the plumbing.