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gment Contribution Margin Analysis e 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) mer (cable networks and digital media) me Box Office (pay television) $91,600 55,800 arner Bros. (films, television, and videos) 92,100 sume that the variable costs as a percent of sales for each segment are as follows: mner me Box Office arner Bros. 32% 47% 49% Determine the contribution margin and contribution margin ratio for each segment from the information given. Round contribution margin ratio to whole percents for each segment from the information given. Enter all amounts as positive numbers. Turner Home Box Office Warner Bros. evenues riable costs ntribution margin ntribution margin ratio (as a percent) % % Does your answer to (b) mean that the other segments are more profitable businesses? e higher contribution margin ratio of a segment should not be interpreted as being the profitable segment. If the volume of business is not sufficient to exceed the break-even point, then the segments would be shows how sensitive the profit will be to changes in volume. the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The

gment Contribution Margin Analysis e 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) mer (cable networks and digital media) me Box Office (pay television) $91,600 55,800 arner Bros. (films, television, and videos) 92,100 sume that the variable costs as a percent of sales for each segment are as follows: mner me Box Office arner Bros. 32% 47% 49% Determine the contribution margin and contribution margin ratio for each segment from the information given. Round contribution margin ratio to whole percents for each segment from the information given. Enter all amounts as positive numbers. Turner Home Box Office Warner Bros. evenues riable costs ntribution margin ntribution margin ratio (as a percent) % % Does your answer to (b) mean that the other segments are more profitable businesses? e higher contribution margin ratio of a segment should not be interpreted as being the profitable segment. If the volume of business is not sufficient to exceed the break-even point, then the segments would be shows how sensitive the profit will be to changes in volume. the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The

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
Section: Chapter Questions
Problem 16E
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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) Home Box Office (pay television) Warner Bros. (films, television, and videos) $91,600 55,800 92,100 Assume that the variable costs as a percent of sales for each segment are as follows: Turner Home Box Office Warner Bros. 32% 47% 49% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. Round contribution margin ratio to whole percents for each segment from the information given. Enter all amounts as positive numbers. Home Box Office Turner Warner Bros. Revenues Variable costs Contribution margin Contribution margin ratio (as a percent) % % % b. Does your answer to (b) mean that the other segments are more profitable businesses? profitable segment. If the volume of business is not sufficient to exceed the break-even point, then the segments would be shows how sensitive the profit will be to changes in volume. The higher contribution margin ratio of a segment should not be interpreted as being the In the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The
Transcribed Image Text: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) Home Box Office (pay television) Warner Bros. (films, television, and videos) $91,600 55,800 92,100 Assume that the variable costs as a percent of sales for each segment are as follows: Turner Home Box Office Warner Bros. 32% 47% 49% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. Round contribution margin ratio to whole percents for each segment from the information given. Enter all amounts as positive numbers. Home Box Office Turner Warner Bros. Revenues Variable costs Contribution margin Contribution margin ratio (as a percent) % % % b. Does your answer to (b) mean that the other segments are more profitable businesses? profitable segment. If the volume of business is not sufficient to exceed the break-even point, then the segments would be shows how sensitive the profit will be to changes in volume. The higher contribution margin ratio of a segment should not be interpreted as being the In the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The
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