Roger Moon Has Just Purchased the Film Studio of a Movie

question 89

Essay

Roger Moon has just purchased the film studio of a movie company that specializes in comedies.He found that the company did not try to estimate the cost of making a movie.Instead,it just gave the producer a budget and told him/her to make a movie within budget.Mr.Moon does not like the former movie-budget concept and desires to establish a formal cost estimation system.
Required:
What are some of the potential problems that may be encountered in changing from a budget to a cost estimation movie making system?

---

Definitions:

Net Income

The amount of profit remaining after all operating expenses, taxes, and interest are deducted from total revenue.

Cash Investment

Funds that are invested in assets that can be quickly turned into cash, or the act of putting money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit.

Equipment Sale

The process of selling off business-owned equipment, either to upgrade to newer assets or to liquidate assets for cash.

Cash Dividend

A payment made by a company out of its earnings to its shareholders in cash.