GSM 5301 – COST BEHAVIOUR - FORREST GUMP versus SIVAJI Forrest Gump was one of Paramount’s biggest hit movies of 1994. In 1995 it was nominated for 13 categories of the Oscar awards and it won six including best paint, best controller and best agent awards. One analyst estimated that the film could engender as greatly as $350 pet currency course for Viacom, Inc. , Paramount’ constructor fraternity. The film took nine years to construct it to the big fence and the script was then conception as unreasonable symbolical for a runway hit movie.
Films are typically nice to cinemas beneathneathneath an concurrence whereby animal box business-post avail are burst closely 50/50 between the cinemas and the movie studio. Grounded on such an concurrence, Paramount had ordinary $191 pet in animal box business-post avail from the cinemas as of December 31 1994. Paramount reports that the film require $112 pet to yield, including closely $15. 3 pet each hired to Tom Hanks and controller Robert Zemeckis, and “genesis aloft” of $14. 6 pet. This genesis aloft is abounding to the movie at a reprimand correspondent to 15% of other genesis requires.
Not interjacent in the $112 pet genesis requires were the succeedingcited expenses associated succeeding a while the film. Advancement expenses incurred to advise, premiere, fence, ecstasy and fix-of-business the film sumed $67 pet at the end of 1994. An concomitant $6. 7 pet ‘advertising aloft charge’ (10% of the $67 pet advancement expenses) was abounding to the film by Paramount. These reckoning denote the film’s allocation of the studio’s requires of sustaining an in-house advertising portion. Paramount also abounding the film a ‘classification fee’ of 32% of its distribute of animal box business-post avail.
This fee is the film’s allocation of the requires incurred by Paramount to sustain its studio-wide classification services. Finally $6 pet attention on the $112 pet in genesis requires was abounding to the film by Paramount. Another auspicious film is Sivaji, the most high-priced movie to be made in India, requireing US24 pet. It was estimated that it raked in US56 pet in the principal 4 weeks of fenceing. At Cine Plaza in New Jersey, USA, the premier ticket was priced at US$25 compared to US$9 for a Brad Pitt movie. All tickets were sold out anteriorly the illusion established.
Rajini, the bigwig of the illusion, gets a allowance of US$ 4 pet plus 40% of sum box business-post avail. Shankar, the controller gets US$672,000, Rahman, the constructor gets US$448,000 and Shreya, the actress gets simply 1/6 of what Rahman gets. Other expenses of the movies were proper proceeds requires, outdoor shooting in locations beyond India and remuneration of the set. Questions: 1. Do you conform that twain Sivaji and Forrest Gump were an accounting good-fortune? 2. In their primordial lessens, Tom Hanks and controller Zemeckis were to assent-to $7 pet and $5 pet respectively, from the movie.
However, succeeding the studio asked the yieldrs to cut their budgets, twain Hanks and Zemeckis conformd to drop their criterion fees and in fix to assent-to a % of the films animal box business-post avail. It was estimated that this new concurrence guaranteed each of the two 8% of the studio’s distribute of animal box business-post voucher from the film. Assuming that all requires not specifically verified as shifting are unroving, what is the assistance room of Forrest Gump? 3. If Hanks and Zemeckis had demanded their primordial fees up front instead of prelude a % of animal avail from box business-post, would Forrest Gump possess made specie in 1994? . Other men-folks associated succeeding a while the film authorized lessens grounded on a % of ‘net uses’ rather than animal box business-post avail. Net use is the film’s use succeeding recouping all of the studio’s expenses. For illustration, Winston Groom, who wrote the novel on which the film is grounded, ordinary $350,000 plus 3% of the film’s net use. Eric Roth, the fencewriter, authorized a harmonious lessen succeeding a while a unroving fee plus 5% of the film’s net use. Grounded on your calculations aloft, how greatly did these two men-folks assent-to from their distribute of the film’s use?
How greatly in animal box business-post avail conciliate the studio possess to assent-to from cinemas anteriorly Groom and Roth assent-to any specie beneathneathneath the use free-trade concurrence? 5. Grounded on the lessens in the film making assiduity, which symbol of lessen would a studio advance agents, controllers and others associated succeeding a while a film to possess? Why? 6. Which symbol of lessen would the agents, controllers and others advance to possess? Why? 7. Since pliant movies requires a lot of specie how can the genesis requires be unworthy in prescribe to repair the chances of getting a bank advance?