Segment Contribution Margin AnalysisThe 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):Line Item DescriptionSegmentMediaNetworksSegmentParks, Experiences,and ProductsSegmentEntertainmentDirect-to-Consumer& InternationalRevenues$28,393 $16,502 $9,636 $16,967 Operating expenses(19,300)(16,700)(7,200)(19,800)Operating income$9,093 $(198)$2,436 $(2,833)Assume the following percentages of total operating expenses for each segment are variable:SegmentPercentage of VariableOperating ExpensesMedia Networks75%Parks, Experiences, and Products60%Studio Entertainment80%Direct-to-Consumer & International70%Question Content Areaa. 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 CompanyVariable Costing Income Statement(in millions)Line Item DescriptionMediaNetworksParks, Experiences,and ProductsStudioEntertainmentDirect-to-Consumer &International $Sales$Sales$Sales$Sales Variable operating expensesVariable operating expensesVariable operating expensesVariable operating expenses $Contribution margin$Contribution margin$Contribution margin$Contribution margin Fixed operating expensesFixed operating expensesFixed operating expensesFixed operating expensesOperating income/loss$Operating income/loss$Operating income/loss$Operating income/loss$Operating income/loss Feedback Area Feedback Partially correctQuestion Content Areab. Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent.SegmentContributionMargin RatioMedia Networksfill in the blank 1 of 4%Parks, Experiences, and Productsfill in the blank 2 of 4%Studio Entertainmentfill in the blank 3 of 4%Direct-to-Consumer & Internationalfill in the blank 4 of 4%

Variable costing income statement refers to the report that is used for calculating the contribution…

Question Content Area 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 CompanyVariable Costing Income Statement(in millions) Line Item Description Media Networks Parks, Experiences, and Products Studio Entertainment Direct-to-Consumer & International $Sales $Sales $Sales $Sales Variable operating expenses Variable operating expenses Variable operating expenses Variable operating expenses $Contribution margin $Contribution margin $Contribution margin $Contribution margin Fixed operating expenses Fixed operating expenses Fixed operating expenses Fixed operating expenses Operating income/loss $Operating income/loss $Operating income/loss $Operating income/loss $Operating income/loss Feedback Area Feedback Partially correct Question Content Area b. Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent. Segment Contribution Margin Ratio Media Networks fill in the blank 1 of 4% Parks, Experiences, and Products fill in the blank 2 of 4% Studio Entertainment fill in the blank 3 of 4% Direct-to-Consumer & International fill in the blank 4 of 4%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Line Item Description	Segment Media Networks	Segment Parks, Experiences, and Products	Segment Entertainment	Direct-to-Consumer & International
Revenues	$28,393	$16,502	$9,636	$16,967
Operating expenses	(19,300)	(16,700)	(7,200)	(19,800)
Operating income	$9,093	$(198)	$2,436	$(2,833)

Segment	Percentage of Variable Operating Expenses
Media Networks	75%
Parks, Experiences, and Products	60%
Studio Entertainment	80%
Direct-to-Consumer & International	70%

Question Content Area

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 CompanyVariable Costing Income Statement(in millions)

Line Item Description	Media Networks	Parks, Experiences, and Products	Studio Entertainment	Direct-to-Consumer & International
	$Sales	$Sales	$Sales	$Sales
	Variable operating expenses	Variable operating expenses	Variable operating expenses	Variable operating expenses
	$Contribution margin	$Contribution margin	$Contribution margin	$Contribution margin
	Fixed operating expenses	Fixed operating expenses	Fixed operating expenses	Fixed operating expenses
Operating income/loss	$Operating income/loss	$Operating income/loss	$Operating income/loss	$Operating income/loss

Feedback Area

Feedback

Partially correct

Question Content Area

b. Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent.

Segment	Contribution Margin Ratio
Media Networks	fill in the blank 1 of 4%
Parks, Experiences, and Products	fill in the blank 2 of 4%
Studio Entertainment	fill in the blank 3 of 4%
Direct-to-Consumer & International	fill in the blank 4 of 4%

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