Examination of film production by management accounting approach

Due to some characteristics like uncertainty in revenues and lack of capital and some others peculiar to the industry, film industry needs management accounting techniques substantially. Although there is some research on film industry in various business fields, research in accounting literature on the subject is rather scarce. This research aims at fulfilling this scarcity to some extend. Descriptive case study method is adopted in the research. There are two main research questions: first, how an ideal budgeting approach should be in film production and second how budget figures can be used in a more effective way in management decisions. Second research question includes sub-questions like; how total costs are affected by the delays in shooting schedule or by planning of shootings in longer shooting days in the first place, what kind of costing system can be adopted in film production and how total costs can be allocated to movie products except from theatrical release more appropriately. In order to find answers to research questions, first a novel budget form and chart of accounts was prepared by careful examination of various budget forms used by industry practitioners. Based on the budget preparation process described in the literature, a film budget was prepared beginning from the script. Based on the prepared budget, incremental cost in case of one week delay of the shooting schedule was estimated. Moreover an application of job order costing in film production was proposed, cost of movie was estimated at a sequence basis and how results can be used in managerial decision making was presented. Last but not least total cost of the film was allocated to movie products and how break-even analysis based on proposed allocation is more accurate than an analysis based on unallocated costs was shown. Keywords: Film Production, Management Accounting, Film Budget, Film Costing.