A Key Film Accounting Task – The Hot Cost

One of the daily tasks of a Film Production Accountant is to prepare a “Hot Cost”.  It’s a major task that would seem to be impossibly grueling, unless you knew the system of things that is behind the Hot Cost.

As an exercise, recall your favorite movie scene, then try to imagine what it would take to estimate the costs of all that scene’s cast, extras, crew  of every kind, as well as the various gun battles, sinking ships, etc etc. Well, that’s the task assigned to the Production Accountant on a daily basis. It can be a challenge, especially since the Film Accountant is expected to send out the report by lunch time the next day.

How is that even possible?

In my opinion the task becomes not only possible, but routine for four reasons:

A well drilled and standardized reporting system unique to the industry.

The daily film and television production reporting system has been perfected over the last century. It could even be described as militaristic. The primary tools are the Shooting Schedule, the Call Sheet and the Daily Production Report as well as the SAG cast report called an “Exhibit G”. The Production Accountant knows how to pull off the information needed to prepare a Hot Cost within 2 to 4 hours.

A working understanding of the Union and Guild Payroll Rules.

In addition to the well known guilds (SAG, DGA, WGA) there are several different union locals under the IATSE umbrella (International Alliance of Theatrical & Stage Employees). The cast and crew regularly work in excess of 12 or 13 hours, resulting in numerous penalties that requires a familiarity with union and guild rules, so a thorough understanding of those agreements.

A hands on familiarity with all costs as they occur 

The Production Accountant works with a team that processes purchase orders, timesheets, credit card/petty cash reports, etc. and every document is initialed or signed by the Production Accountant. All of the costs flow into a unique general ledger software system used throughout the film and television production industry. 

A thorough grounding in the line-by-line items in the Approved Budget

 Once the costs are gathered together they need to be compared, line-by-line, with the Approved Budget for that particular production. The Production Accountant not only is a major contributor to the preparation of the Approved Budget, but he/she and the team of assistant accountants use the Approved Budget every day as they code costs to be entered to the general ledger system.

In summary, a working understanding of each of those four categories provides the Production Accounting Accountant with the ability to comfortably pull off the Hot Cost in less than a few hours.

If you’re interesting in taking the first step towards each of these categories above, come to our Film Accounting 101 Weekend Workshop, coming up in Chicago in May, 2018..

 

To find out more, check out http://www.filmaccounting.com

Cheers / John

 

 

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About filmproduction
I have worked in the film production industry since 1985, working on over 50 different productions of every size in 6 different countries. My self-published book, "Walk The Talk" is written in an easy to read manner for film students and working professionals who haven't had the chance to learn how to 'Direct the Money'.

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