Know I know that there is money spent on salaries and then rent, but what else is money spent on? What is responsible for the massively escalating costs on development on PS360, is it just the extra time? Or are there other things?

I know there are costs like devlopment kits and other equipment, but in the grand scale of things, these can't be too great.

Huge teams of artists dedicated to 2-3 models each. Perfecting one character model in HD can take up to a month. Now picture 200 models, not including the level design. You're talking about 200 member-sized teams. Of course, most of this work is outsourced to seperate studios, so you'll never see the whole list in the credits just "Graphics Plus Studios" or whatever.

It's the larger team and larger amount of time needed to make a HD game.

In no particular order:

Ball pits
Beer kegs
Nerf guns
Strip-o-grams
Cuban cigars
Helicopters
Hangover remedies

The tools needed to create the game. That stuff probably is expensive as hell.

Art team is the major cost for most games this gen....

Manpower.

So it isn't any more than just more manpower? So Insmoniac will have similar dev costs to last gen because while they may have expanded a little, they are still releasing games every year

Royalties for the Big 3 are getting higher, Leasing/Renting the building space to actually make the game in, marketing costs on TV, Internet, Physical, Events, licencing IP names.

Wait does the total development cost pay for the employers?