Business
AccountingFinancial & Managerial AccountingSegment 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) $10,596 Home Box Office (pay television) 5,615 Warner Bro. (films, television, and videos) 12,993 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 40% Home Box Office 35% Warner Bros. 25% A. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percents) 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?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) $10,596 Home Box Office (pay television) 5,615 Warner Bro. (films, television, and videos) 12,993 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 40% Home Box Office 35% Warner Bros. 25% A. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percents) 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?
BuyFindlaunch
Financial & Managerial Accounting
14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFindlaunch
Financial & Managerial Accounting
14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
Solutions
Chapter
Section
Chapter 20, Problem 20.16EX
Textbook Problem
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) | $10,596 |
| Home Box Office (pay television) | 5,615 |
| Warner Bro. (films, television, and videos) | 12,993 |
Assume that the variable costs as a percent of sales for each segment are as follows:
| Turner | 40% |
| Home Box Office | 35% |
| Warner Bros. | 25% |
- A. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percents) 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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Financial & Managerial Accounting
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