Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 20, Problem 20.16EX
(a)
To determine
Contribution Margin
Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.
To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.
(b)
To determine
To Identify: Does the segment with the highest contribution margin in the option A means, that it is the most profitable segment with the highest operating income.
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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)
$74,400
Home Box Office (pay television)
82,700
Warner Bros. (films, television, and videos)
16,600
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner
36%
Home Box Office
53%
Warner Bros.
24%
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
Warner Bros.
Revenues
$fill in the blank 1
$fill in the blank 2
$fill…
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)
$71,200
Home Box Office (pay television)
10,800
Warner Bros. (films, television, and videos)
95,800
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner
32%
Home Box Office
21%
Warner Bros.
33%
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
Warner Bros.
Revenues
$fill in the blank 1
$fill in the blank 2
$fill…
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.
Chapter 20 Solutions
Financial & Managerial Accounting
Ch. 20 - What types of costs are customarily included in...Ch. 20 - Which type of manufacturing cost (direct...Ch. 20 - Which of the following costs would be included in...Ch. 20 - In the variable costing income statement, how are...Ch. 20 - Since all costs of operating a business are...Ch. 20 - Discuss how financial data prepared on the basis...Ch. 20 - Why might management analyze product...Ch. 20 - Explain why rewarding sales personnel on the basis...Ch. 20 - Discuss the two factors affecting both sales and...Ch. 20 - How is the quantity factor for an increase or a...
Ch. 20 - Explain why service companies use different...Ch. 20 - Variable costing Marley Company has the following...Ch. 20 - Variable costingproduction exceeds sales Fixed...Ch. 20 - Variable costing sales exceed production The...Ch. 20 - Analyzing income under absorption and variable...Ch. 20 - Contribution margin by segment The following...Ch. 20 - Contribution margin analysis The actual variable...Ch. 20 - Inventory valuation under absorption costing and...Ch. 20 - Income statements under absorption costing and...Ch. 20 - Income statements under absorption costing and...Ch. 20 - Cost of goods manufactured, using variable costing...Ch. 20 - Variable costing income statement On November 30,...Ch. 20 - Absorption costing income statement On March 31....Ch. 20 - Variable costing income statement The following...Ch. 20 - Estimated income statements, using absorption and...Ch. 20 - Variable and absorption costing Ansara Company had...Ch. 20 - Prob. 20.10EXCh. 20 - Prob. 20.11EXCh. 20 - Product profitability analysis Power Train Sports...Ch. 20 - Territory and product profitability analysis Coast...Ch. 20 - Sales territory and salesperson profitability...Ch. 20 - Segment profitability analysis The marketing...Ch. 20 - Prob. 20.16EXCh. 20 - Contribution margin analysis sales Select Audio...Ch. 20 - Prob. 20.18EXCh. 20 - Contribution margin analysis variable costs Based...Ch. 20 - Variable costing income statement for a service...Ch. 20 - Contribution margin reporting and analysis for a...Ch. 20 - Variable costing income statement and contribution...Ch. 20 - Absorption and variable costing income statements...Ch. 20 - Income statements under absorption costing and...Ch. 20 - Absorption and variable costing income statements...Ch. 20 - Salespersons' report and analysis Walthman...Ch. 20 - Segment variable costing income statement and...Ch. 20 - Contribution margin analysis Farr Industries Inc....Ch. 20 - Prob. 20.1BPRCh. 20 - Income statements under absorption costing and...Ch. 20 - Absorption and variable costing income statements...Ch. 20 - Salespersons' report and analysis Pachec Inc....Ch. 20 - Variable costing income statement and effect on...Ch. 20 - Contribution margin analysis Mathews Company...Ch. 20 - Prob. 1ADMCh. 20 - Prob. 2ADMCh. 20 - Apple Inc.: Segment revenue analysis Segment...Ch. 20 - LVMH: Group segment sales and EBITDA analysis LVMH...Ch. 20 - Prob. 20.1TIFCh. 20 - Communication Bon Jager Inc. manufactures and...
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