4. The operating revenues of the three largest business segments for Time Warner, Inc., fo recent year follow. Each segment includes a number of businesses, examples of which a indicated in parentheses. Time Warner Inc. Segment Revenues (in millions) Turner (cable networks and digital media) $10.596

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 16E
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4. The operating revenues of the three largest business segments for Time Warner, Inc., for a
recent year follow. Each segment includes a number of businesses, examples of which are
indicated in parentheses.
Time Warner Inc.
Segment Revenues (in millions)
Turner (cable networks and digital media)
Home Box Office (pay television)
$10,596
5,615
Warner Bros. (films, television, and videos)
12,993
Assume that the variable costs as a percent of sales for each segment are as follows:
Segment
Percentage
Turner
37%
Home Box Office
33%
Warner Bros.
30%
а.
Determine the contribution margin (round to whole millions) and contribution margin
ratio (round to whole percentages) for each segment from the information given.
b. Does the segment with the highest contribution margin in (a) mean that it is the most
profitable segment with the highest operating income?
Transcribed Image Text:4. The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Time Warner Inc. Segment Revenues (in millions) Turner (cable networks and digital media) Home Box Office (pay television) $10,596 5,615 Warner Bros. (films, television, and videos) 12,993 Assume that the variable costs as a percent of sales for each segment are as follows: Segment Percentage Turner 37% Home Box Office 33% Warner Bros. 30% а. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percentages) for each segment from the information given. b. Does the segment with the highest contribution margin in (a) mean that it is the most profitable segment with the highest operating income?
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