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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Segment Contribution Margin Analysis
The Walt Disney Company (DIS) is a global entertainment company that is organized into four business segments as follows:
Media Networks:
Television production and distribution, including ABC television network, ESPN, National Geographic.
Parks, Experiences, and Products:
Theme parks and resorts, including Walt Disney World and Disneyland; Experiences, including Disney Cruise Line and Disney Vacation Club; Products,
including Disney and Pixar characters, comic books, and magazines.
Studio Entertainment:
Music and motion picture production and distribution, including Twentieth Century Studios, Marvel, and Lucasfilm.
Direct-to-Consumer & International:
Streaming services, including Disney+, ESPN+, and Hulu.
For a recent year, Disney reported the following segment results (in millions):
Segment
Parks,
Segment Experiences,
Media
and
Networks
Revenues $28,393
Operating
expenses
(19,300)
Operating
income
Assume the following percentages of total operating expenses for each segment are variable:
$9,093
Direct-to-
Consumer
Segment
&
Products Entertainment International
$16,502
$9,636
$16,967
(16,600)
(7,100)
(19,900)
Segment
Media Networks
Parks, Experiences,
and Products
Studio Entertainment
Direct-to-Consumer
& International
$(98)
Percentage of
Variable
Operating
Expenses
75%
60%
80%
70%
$2,536
$(2,933)
Transcribed Image Text: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.
The Walt Disney Company
Variable Costing Income Statement
(in millions)
Line Item Description
Operating income/loss $
Media
Networks
Media Networks
Parks, Experiences,
and Products
Studio Entertainment
Direct-to-Consumer &
%
b. Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent.
Contribution
Margin
Ratio
%
%
Parks, Experiences,
and Products
%
$
Studio
Entertainment
Direct-to-Consumer &
International
International
c. Based on your answers to (a) and (b), interpret the segment performance.
All segments generated a
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
segments generated operating
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.
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