a. Prepare a variable costing income statement for The Walt Disney Company by segment. If required, use a minus sign to indicate an operating loss. Round all amounts to the nearest million. Operating income/loss The Walt Disney Company Variable Costing Income Statement (in millions) Line Item Description Networks Media Parks, Experiences, and Products Media Networks Parks, Experiences, and Products Studio Entertainment % b. Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent. Contribution Margin Ratio % % Studio Entertainment Direct-to-Consumer & International % $ Direct-to-Consumer & International c. Based on your answers to (a) and (b), interpret the segment performance. All segments generated a segments generated operating contribution margin, even though the Parks, Experiences, and Products and Direct-to-Consumer & International . The Media Networks segment generated the contribution margin and contribution margin ratio. The Parks, Experiences, and Products and Studio Entertainment segments generated approximately the contribution margin ratios. However, because of its size, the Parks, Experiences, and Products segment generated contribution margin than the Studio Entertainment segment. The Direct-to-Consumer & International segment generated the contribution margin ratio and contribution margin. The recent COVID-19 pandemic affected the preceding results. The Parks, Experiences, and Products and Studio Entertainment segments were affected. Thus, the preceding results are of Disney's normal operations for these segments.

Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply's business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments. Sales Variable costs Contribution margin Direct fixed costs Allocated common fixed costs Net income Party Supply segment data Costumes Party Supplies $160,000 84,000 76,000 50,000 30,000 $110,000 50,000 60,000 20,000 25,000 Floral Decorations $210,000 120,000 90,000 25,000 30,000 $(4,000) $15,000 $35,000 If costumes are dropped, what change will occur to profit? If the effect is negative, use a dash - not parentheses ().

V. Prepare a CONTRIBUTION MARGIN (also known as variable costing) income statement given a traditional (also known as absorption costing) income statement Bruno Industries manufactures and sells a single product. The controller has prepared the following income statement for the most recent year: B C D 1 2 3 Bruno Industries Traditional Income Statement (Absorption Costing) For the Year Ended December 31 4 5 Sales revenue 6 Less: Cost of goods sold 7 Gross profit 8 Less: Operating expenses 9 Operating income $ 406,000 329,000 $ 77,000 73,000 $ 4,000 10 The company produced 8,000 units and sold 7,000 units during the year ending December 31. Fixed manufacturing overhead (MOH) for the year was $152,000, while fixed operating expenses were $62,000. The company had no beginning inventory. Requirements 1. Will the company's operating income under variable costing be higher, lower, or the same as its operating income under absorption costing? Why? 2. Prepare a variable costing income…

APPLY THE CONCEPTS: Prepare a contribution margin income statement Assume that you are part of the accounting team for Starr Productions. The company has only one product that sells for $40 per unit. Starr estimates total fixed costs to be $3,700. Starr estimates direct materials cost of $12.00 per unit, direct labor costs of $15.00 per unit, and variable overhead costs of $3.00 per unit. The CEO would like to see what the gross margin and operating income will be if 600 units are sold in the next period. Prepare a contribution margin income statement. Starr Productions Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income