Advanced AV Production Practicum Math for The Audio Video Professional Advanced AV Production Practicum Calculating Production Costs Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs Objective: To calculate the cost of an Audio Video Project and to determine how much it will cost a small business to produce the video. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Students Will – Calculate an assortment percentages, mark-ups and rates. Understand the additional cost associated with labor. Demonstrate proficiency with math calculations. Demonstrate reasoning and decision making skills. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Scenario – Sam is a new startup video production company. His new production company has limited equipment and resources. However, he has built a reputation for creating quality work and is on the verge of growing his business. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Scenario – Sam has been asked to provide a proposal to a local municipality for an informational video on Trash Collection. The video is to air on the local municipality cable TV channel. The video must be produced to broadcast standards. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Scenario – GOAL: Sam needs to determine what his actual production costs are going to be to his business for this specific project. These are the costs that he must incur and manage before the municipality pays the bill. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Equipment Costs – Formula Day Rate Rental Fee Day Rate x Number of Days Rented = Total Rental Cost Example: Camera $300.00 Per Day x 6 Days Rental = $1800.00 Total Rental Cost Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Equipment Costs – Formula Weekly Rate 10% discount for renting by the week; 5 days rental = 1 week Rental Fee Day Rate x 5 days x 10% = The discount Rental Fee Day Rate x 5 – The discount = Weekly Rental Cost Example: Camera $300 x 5days = $1500.00 x 10% discount = $150.00 $1500.00 – $150.00 discount = $1350.00 Weekly Rental Cost Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Equipment Costs – Total Equipment Cost = The sum of all Equipment Rental Costs Cost of Camera + Cost of Tripod + Cost of Lights + Cost of Mics + Cost of Editor = Total Equipment Costs Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Labor Cost Step 1 Sam’s Hourly Rate x Total Hours Worked = Total Wage Earned Example $25.00 per hour x 120 hours = $3000.00 Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Labor Cost Step 2 Sam’s Total Wage Earned x % Payroll Tax = Total Payroll Tax Owed. Example $3000.00 x 6.50% = $195.00 Employment taxes such as Social Security and Medicare are split between the Employer and the Employee. The Employee pays half and the Employer Contributes half. As Owner of the Business Sam must pay the entire tax on himself. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Labor Cost Step 3 Sam’s Total Wage Earned x % Employment Tax = Total Employment Tax Owed. Example $3000.00 x 0% = $0.00 As owner of the business Sam does not pay employment tax on himself. He only pays employment tax on his employees. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Labor Cost Step 4 Sam’s Total Wage Earned + Payroll Tax + Employment Tax = Total Sam’s Labor Cost. Example $3000.00 + $195.00 + $0.00 = $3195.00 As owner of the business Sam does not pay employment tax on himself. He only pays employment tax on his employees. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Employee 2 Labor Cost Step 1 Employee Hourly Rate x Total Hours Worked = Total Wage Earned Example $7.85 per hr x 72 hrs = $565.20 Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Employee 2 Labor Cost Step 2 Employee Total Wage Earned x % Payroll Tax = Total Payroll Tax Owed. Example $565.20 x 3.25% = $18.37 Employment taxes such as Social Security and Medicare are split between the Employer and the Employee. The Employee pays half and the Employer Contributes half. As Owner of the Business Sam must pay the entire tax on himself. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Employee 2 Labor Cost Step 3 Employee Total Wage Earned x % Employment Tax = Total Employment Tax Owed. Example $565.20 x 1.25% = $7.06 As owner of the business Sam does not pay employment tax on himself. He only pays employment tax on his employees. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Sam’s Employee 2 Labor Cost Step 4 Employee Total Wage Earned + Payroll Tax + Employment Tax = Total Sam’s Labor Cost. Example $2000.00 + $130.00 + $0.00 = $2130.00 REPEAT Steps 1-4 for All Employees As owner of the business Sam does not pay employment tax on himself. He only pays employment tax on his employees. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Factor Labor Costs – Step 5 Sam’s Total Labor Cost + Employee 1 Labor Costs + Employee 2 Labor Costs = Total Labor Cost Example $3195.00 + $877.80 + $590.63 = $4663.13 Total Labor Cost As owner of the business Sam does not pay employment tax on himself. He only pays employment tax on his employees. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs – Total Costs – Total Equipment Cost + Total Labor Cost = Total Production Cost Reminder: This is what it will cost Sam to do the job. This is not what he will bill the Client. He still needs to add additional overhead and profit margin. As owner of the business Sam does not pay employment tax on himself. He only pays employment tax on his employees. Copyright © Texas Education Agency, 2015. All rights reserved.

Calculating Production Costs Your Turn! Copyright © Texas Education Agency, 2015. All rights reserved.