Time Warner, Inc. Segment Revenues (in millions) Turner (cable networks and digital media) $29,000 Home Box Office (pay television) 42, 300 Warner Bros. (films, television, and videos) 71, 300 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 54% Home Box Office 18% Warner Bros. 17% 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. Turner Home Box Office Warner Bros. Revenues $ fill in the blank 1 $ fill in the blank 2 $ fill in the blank 3 Variable costs fill in the blank 4 fill in the blank 5 fill in the blank 6 Contribution margin $ fill in the blank 7 S fill in the blank 8 $ fill in the blank 9 Contribution margin ratio (as a percent) fill in the blank 10 % fill in the blank 11 % fill in the blank 12 % b. Does your answer to (b ) mean that the other segments are more profitable businesses? The 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. In the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The shows how sensitive the profit will be to changes in volume.
Time Warner, Inc. Segment Revenues (in millions) Turner (cable networks and digital media) $29,000 Home Box Office (pay television) 42, 300 Warner Bros. (films, television, and videos) 71, 300 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 54% Home Box Office 18% Warner Bros. 17% 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. Turner Home Box Office Warner Bros. Revenues $ fill in the blank 1 $ fill in the blank 2 $ fill in the blank 3 Variable costs fill in the blank 4 fill in the blank 5 fill in the blank 6 Contribution margin $ fill in the blank 7 S fill in the blank 8 $ fill in the blank 9 Contribution margin ratio (as a percent) fill in the blank 10 % fill in the blank 11 % fill in the blank 12 % b. Does your answer to (b ) mean that the other segments are more profitable businesses? The 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. In the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The shows how sensitive the profit will be to changes in volume.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Time Warner, Inc. Segment Revenues (in millions) Turner (cable networks and digital media) $29,000 Home
Box Office (pay television) 42, 300 Warner Bros. (films, television, and videos) 71, 300 Assume that the
variable costs as a percent of sales for each segment are as follows: Turner 54% Home Box Office 18%
Warner Bros. 17% 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. Turner Home Box Office Warner Bros. Revenues $
fill in the blank 1 $ fill in the blank 2 $ fill in the blank 3 Variable costs fill in the blank 4 fill in the blank 5 fill in
the blank 6 Contribution margin $ fill in the blank 7 $ fill in the blank 8 $ fill in the blank 9 Contribution margin
ratio (as a percent) fill in the blank 10 % fill in the blank 11 % fill in the blank 12% b. Does your answer to (b
mean that the other segments are more profitable businesses? The 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. In the final analysis, the fixed costs
also should be considered in determining the overall profitability of the segments. The shows how sensitive
the profit will be to changes in volume.
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