3. 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) Assume that the variable costs as a percent of sales for each segment are as follows: Segment Turner Home Box Office Warner Bros. $10,596 5,615 12,993 Percentage 37% 33% 30% a. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percentages) 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?
3. 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) Assume that the variable costs as a percent of sales for each segment are as follows: Segment Turner Home Box Office Warner Bros. $10,596 5,615 12,993 Percentage 37% 33% 30% a. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percentages) 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![h
3. 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.
Segment Revenues (in millions)
Time Warner Inc.
Turner (cable networks and digital media)
Home Box Office (pay television)
Warner Bros. (films, television, and videos)
Segment
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner
Home Box Office
Warner Bros.
$10,596
5,615
12,993
Percentage
37%
33%
30%
a. Determine the contribution margin (round to whole millions) and contribution margin
ratio (round to whole percentages) 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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb39c7dee-7c3f-4481-823f-1eba39ee6dcc%2Fa0c34f09-e9c7-4600-941b-953e41f8c688%2Fc4ze3hk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:h
3. 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.
Segment Revenues (in millions)
Time Warner Inc.
Turner (cable networks and digital media)
Home Box Office (pay television)
Warner Bros. (films, television, and videos)
Segment
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner
Home Box Office
Warner Bros.
$10,596
5,615
12,993
Percentage
37%
33%
30%
a. Determine the contribution margin (round to whole millions) and contribution margin
ratio (round to whole percentages) 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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