Movies are expensive to produce and market. According to IMDb, the most expensive film on record is Pirates of the Caribbean: At Worlds End, with a total budget of $336 million. This movie and its budget were widely publicized prior to the premire of the film, and moviegoers were eager to see the results of this massive movie budget. Like other larger projects, movies have budgets. Potential financiers look at the budget, the script, and other factors to decide whether to invest in the movie. Several categories of costs will be in a movie's budget, including:

- Story rights

- Screenplay

- Producers and directors

- Cast

- Production costs

- Special Effects

- Music

The typical film budget your read about in the press includes only expenses. The movies budgets released to the general public do not include estimated box office receipts or other revenue streams. In addition, movie budgets do not usually include marketing costs, which can be another 50% or more of the films publcized budget.

Producers and directors will frequently release budget figures for upcoming movies,a nd these budget figures will be reported in several news outlets. However, LA TImes writer Patrick Goldstein states that 'everyone" lies about their movie budgets. For example, it was reported intially that The Avengers, a Marvel Studios film, had an overall budget of $170 million. Another source indiciated that the budget for The Avengers was $260 million. Which one of these figures was the "correct" budget figure? No one outside of the management of the movies really knows.

Requirements

1.) Budgeting for a movies can be challenging. Frequently, budget items change as the movie producaiton progesses. If budgeting for a movie is difficult, why prepare a movie budget?

2.) What reasons can a movie director have for misrepresenting the overall budget for a particular movie? Is misrepresenting a movie budget unethical? Do you think misrepresenting a movie's total budget expenditures to the public harms anyone? Why or why not?

3.) "If Hollywood movie's box office number exceeds its production budget, then that movie makes a profit." From reading the information given in the case, do you agree with this statement? Why or why not?

4.) Sometimes actors, directors, and producers are asked to take a lower salery up front and instead receive a percentage of the film's overall gross profits 9from box office receipts, DVD sales, and similar revenue streams). Why might the film company propose this arangement? Why might the actors, directors, and producers accept this arrangement? Would this type of arrangement (lower salary up front with a percentage of the film's gross profts later) make the budgeting process easier or more challenging? Why/

Thanks so much in advance!