Question
In their original contracts, actor Tom Hanks and director Robert Zemeckis were to receive $7 million and $5 million respectively, for their work on Forrest
In their original contracts, actor Tom Hanks and director Robert Zemeckis were to receive $7 million and $5 million respectively, for their work on Forrest Gump. However, after the studio asked the producers for budget cuts, both Hanks and Zemeckis agreed to forego their standard fee for a percentage of the films gross box office receipts. Sources estimate that the new agreement guaranteed each of the two 8% of the studio share of gross box office receipts from the film. Using the information available about the costs of making the film, did Forrest Gump have a positive contribution margin? Assume that all costs not specifically identified as variable are fixed.
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