I remember hearing it about Star Trek: TNG and Buffy back in the day, and lately I’ve heard it as the typical per-episode cost of a (hand-drawn) half-hour animated cartoon.
What does that encompass? All costs for the entire show (i.e., derived by dividing the total season budget by the number of episodes being produced)? Or is it less than that? Does it include actor salaries, writer salaries, etc.?
Television shows generally start with a loan.
Item one on the cost list is the interest on the loan.
Salaries for actors, cameramen, make up artists, second unit directors, assistant producers, caterers, . . . dolly grips, . . . etc. etc. etc. Have a look at the credits. Just about everyone on that list got paid. It was all costs.
Payment for all the music played, including background stuff.
Rent for the locations, studios, and probably some temporary living space for a few folk you can not get to come otherwise.
Transportation for all those people, too.
The suits who sell the advertising for the the show, accountants, lawyers, technical experts of various types. Their secretaries, their assistants, and their secretaries.
Properties. (that is every set peice, every prop, and every costume for the entire production.) You have to have someone to buy, make, inventory, store, and take care of every single item, and arrange for said items to appear on the set when they need to. You will need a place to keep them, too.
Do we have script? We might need one. If it is a long running show, we need some continuity checkers, too.
By the way, these people all live in either Los Angeles, or New York, so go figure the salary ranges you are going to have to offer, if you want anything above average in terms of ability.
A thousand a week here, a thousand a week there, pretty soon, you’re talking real money.
Tris
… and is that “$1 million an episode” based on a simple division of the full season’s production costs? Or is it really $1 million an episode plus an additional $10 million in other costs…
OP mentioned shows with FX. Render farms don’t maintain, power and cool themselves. You have dozens of computers and Xeon chips run pretty hot. Then there’s the workstations. I still prefer CRT monitors for my work and I want a fast workstation, so there is a big heat source. For every watt you pump into a computer, (or light bulb or microwave oven for that matter) you need two watts or more of AC to remove the heat from the building. Then, add the equivalent of a 100w bulb’s worth of heat for every person in the place, and you are talking about real money. Electricity is a surprisingly large cost for FX houses. I hear movie lights use a lot of power too. 
So I guess one answer is that some of the money goes to your local power company and the contractors who build power stations and the companies that make turbines and such like General Electric. Many retirement plans hold GE stock, so the ultimately some of the money goes to your Grandma! Just go and make a pencil by yourself! I dare ya!
Um, anyway, a lot of the work is handed off to subcontractors that have their own overhead, rent, etc. Is there an animal? Is there a stunt? Is there catering? (answer: maybe, almost always, always) Chances are that was a subcontractor, and they all have their unique expenses. I don’t buy much monkey food, but I spend a lot on computers and electricity.
Let me rephrase the question. I fully understand that TV episodes are f—ing crazy expensive, and rightly so.
That’s not my question. My question: When people typically say, "That show costs “$x million per episode,” does that refer to the entire budget of the season (22 episodes x $1 million/episode = $22 million for the full season), or does it only refer to some of the costs for the season ([22 episodes x $1 million/episode] + additonal $8 million in salaries to actors, producers, and Chippendale’s dancers that aren’t included in per-ep. costs for whatever reason = $30 million for the full season)?
Overhead or startup costs (e.g., building main sets) are usually amortized over a period of several years, not on a single episode or single season.
When the number x dollars per episode is thrown around, it’s usually by journalists, not by the production people itself. There’s no official definition. It’s just a shorthand for whether the show is expensive or less so. That makes it hard to know exactly what costs are being referred to in any individual report.
My guess is that it normally includes the above the line costs - that’s the salaries of the cast, the show runners, and the production company - and an estimate for the below the line costs - the crew, soundstage, sets, music, canned laughter. It’s decidedly an estimate. Cast salaries are normally a secret, no matter how often you see them in gossip articles, and the salaries for the behind the scenes people are even less well known. And it’s also an extrapolation, since you sometimes see the number when only a limited number of shows or even just a pilot have been shot.
The best way to think about it is that the next show to be shot will cost about x dollars in basic unavoidable costs.
Maybe back when shows were sponsored, but these days shows are sold to the network or into syndication, and that where advertising sales costs go.
Except for the stars of shows, most actors get union scale, as do most crew I assume. This includes payment for shooting and also residuals. Even recurring roles get this, at least in basic cable.
As for expenses, you forgot craft services. That comes high on the list of things important to anyone who ever spent much time on a set. 
I suspect, however, that the $ / episode number comes from the budget for the shows run divided by the number of episodes made. Episodes don’t cost the same. In some shows, you can tell when they’re running out of money - they reuse sets and music from previous shows.
And of course we are forgetting the variable of the skill of the Network’s tax law department, which will affect the “cost” figure more than any other single thing.
Tris