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Segment Contribution Margin Analysis 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) $23,800   Home Box Office (pay television) 12,200   Warner Bros. (films, television, and videos) 21,300   Assume that the variable costs as a percent of sales for each segment are as follows: Turner 42%   Home Box Office 47%   Warner Bros. 30%   a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information g

Segment Contribution Margin Analysis 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) $23,800   Home Box Office (pay television) 12,200   Warner Bros. (films, television, and videos) 21,300   Assume that the variable costs as a percent of sales for each segment are as follows: Turner 42%   Home Box Office 47%   Warner Bros. 30%   a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information g

Managerial Accounting
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
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Segment Contribution Margin Analysis

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) $23,800  
Home Box Office (pay television) 12,200  
Warner Bros. (films, television, and videos) 21,300  

Assume that the variable costs as a percent of sales for each segment are as follows:

Turner 42%  
Home Box Office 47%  
Warner Bros. 30%  

a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given.

a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Revenues Variable costs Contribution margin Contribution margin ratio (as a percent) % b. Does your answer to (a) mean that the other segments are more profitable businesses? The higher contribution margin ratio of a segment should not be interpreted as being the exceed the break-even point, then the segments would be profitability of the segments. The % Warner Bros. $ % profitable segment. If the volume of business is not sufficient to . In the final analysis, the fixed costs also should be considered in determining the overall shows how sensitive the profit will be to changes in volume.
Transcribed Image Text:a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Revenues Variable costs Contribution margin Contribution margin ratio (as a percent) % b. Does your answer to (a) mean that the other segments are more profitable businesses? The higher contribution margin ratio of a segment should not be interpreted as being the exceed the break-even point, then the segments would be profitability of the segments. The % Warner Bros. $ % profitable segment. If the volume of business is not sufficient to . In the final analysis, the fixed costs also should be considered in determining the overall shows how sensitive the profit will be to changes in volume.
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