Fixed or Variable Costs

In this article, the fixed costs is $15 million, which is the amount that the Physicist Stephen Hawking spent while preparing the film, the theory of everything (Baker, 2016). Fixed costs are the costs that an individual incurs while preparing or processing a product or service, until when it is ready to be offered to customers in the market. In this case, the total cost of this film entailed a number of inputs, including paying of venues, costumes, actors, permits, scriptwriting, and transport, among others. An individual must incur a fixed cost regardless of whether he or she made a profit or not. It is worth noting that the quality of the inputs that an individual invests during the production process may influence the level of outputs or returns that he or she can get.

Redmayne managed to earn a gross income of $123 million out of the film, the theory of everything. This amount can be categorized as the variable cost (Baker, 2016). A variable cost tends to change based on the company`s production volume. Precisely, variable costs rise as the company increases its production, and falls when the production decreases. For example, in this article, when Redmayne marketed the film through live performances and advertisements, more individuals managed to learn about its existence, and this stimulated majority of them to buy or subscribe it on you tube and other channels. The more inputs that will be embraced in order to market it, the more the revenues. Apparently, variable cost of one product differs with that of another. For example in this case, if Redmayne opted to shoot another film, the cost that he would incur will not be the same as what he previously incurred in the film, the theory of everything.

Reference

Baker S., (2016). Moviemaking, Without Superheroes. Retrieved from, https://www.bloomberg.com/news/articles/2016-01-14/working-title-films-moviemaking-without-superheroes

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