Question

As of \(2010,\) Auatar was the top-grossing movie of all time, grossing 2,729,673,452 dollar in total box office sales in the world. If the budget for making the film was 387,000,000 dollar what was the net? Was it a profit or loss?

Short answer

Answer: The net profit for Avatar was 2,342,673,452 dollars.

Step-by-step solution

Identify the given values

We are given the total box office sales (2,729,673,452 dollars) and the budget for making the film (387,000,000 dollars).

Calculate the net profit or loss

To find the net profit or loss, we need to subtract the budget from the total sales: 2,729,673,452 - 387,000,000 = 2,342,673,452 dollars.

Determine if it's a profit or loss

Since the result is a positive number (2,342,673,452 dollars), it represents a profit. So, the net for Avatar was 2,342,673,452 dollars, and it was a profit.

Key concepts

Subtraction of Numbers

Subtraction is one of the core arithmetic operations that students encounter early in their math education. It involves calculating the difference between two numbers, which can represent various real-world situations, such as calculating change, measuring distances, or, as in our exercise, determining net profit. When subtracting large numbers, like the box office sales and budget of a movie, it's important to line up the numbers by their place value. Starting from the right, you subtract the smaller number from the larger one, column by column. If necessary, you 'borrow' from the next column.
Here's a simplified example using the exercise figures:
Imagine you have 2,729 dollars and you spend 387 dollars. To find out how much money you have left (your 'net'), you would subtract 387 from 2,729. Subtract each place value individually, and you have:

• 9 minus 7 in the ones place,
• 20 minus 80 in the tens place (after borrowing 100),
• 600 minus 300 in the hundreds place (after the previous borrow),
• 2,000 minus 0 in the thousands place.

The end result would be 2,342, mirroring the exercise where the net profit is calculated by subtracting the expenditure (budget) from the income (total box office sales). This process, when scaled to their respective actual values, shows that 'Avatar' made a significant profit.

Profit and Loss Analysis

Profit and loss analysis is crucial not only in business but also in understanding economic scenarios, like evaluating a movie's financial success. Profit occurs when the revenue from selling goods or services is more than the cost to produce or deliver them. Loss, on the contrary, happens when expenses exceed revenues.
In the case of 'Avatar', a basic profit and loss analysis involves the following steps:

• Calculating Revenue: Assess the total amount of money earned, in this case, the box office sales.
• Calculating Costs: Add up all expenses, here represented by the movie's production budget.
• Net Profit: Deduct the costs from the revenue. If the result is a positive number, you've made a profit.

For 'Avatar’, grossing over \(2.7 billion at the box office against a budget of \)387 million, the subtraction reveals a vast positive difference, indicating a well-deserved profit. A profit and loss statement helps businesses make informed decisions, plan for the future, and attract investors by showing potential for growth.

Budget Management

Managing a budget is about planning, organizing, tracking, and controlling your financial resources. Budget management enables businesses, and even individuals, to ensure they have enough money for the things they need and the goals they strive to achieve.
When creating a movie like 'Avatar', budget management plays a pivotal role. Here’s how it could work in a simplified manner:

• Estimation: Establish an initial budget based on script analysis, casting, crew salaries, special effects, and other production costs.
• Allocation: Distribute the budget to different departments, ensuring each has sufficient funds to operate.
• Monitoring: Regularly track expenses to ensure they align with the planned budget. Adjustments may be made to prevent overspending.
• Cost Control: Implement measures to keep spending within the budget. This could involve negotiating better rates, finding cost-effective alternatives, or cutting non-essential expenditures.

The key to successful budget management is maintaining a balance between the available funds and the expenses. 'Avatar’s' budget of $387 million was carefully managed to achieve the groundbreaking success it did. Overspending can lead to financial loss, while underspending might mean missed opportunities for quality improvement or marketing.