Question

The operating revenues of the three largest business segments for Time Warner, Inc., for a recent...

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) $14,218
Home Box Office (pay television) 12,014
Warner Bros. (films, television, and videos) 3,478

Assume that the variable costs as a percent of sales for each segment are as follows:

Turner 36%
Home Box Office 33%
Warner Bros. 74%

Required:

a. Determine the contribution margin and contribution margin ratio for each segment from the information given. Enter amounts in millions rounded to whole amount. Round contribution margin ratios to whole percents for each segment from the above information. Enter all amounts as positive numbers. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
b. Does the segment with the highest contribution margin in (a) mean that it is the most profitable segment with the highest operating income?

Homework Answers

Answer #1

Answer:-a)-

Time Warner Inc.
Contribution margin
($ in millions)
Segments Turner Cable Ratios Home Box Ratios Warner Bros. Ratios
$ % $ % $ %
Sales Revenues 14218 100 12014 100 3478 100
Less:- Variable costs 14218*36%=5118 36 12014*33%=3965 33 3478*74%=2574 74
Contribution Margin 9100 74 8049 67 904 26

b)-No, it is does not mean that the segment having highest contribution margin will be the most profitable segment with the highest operating income.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Analyze Comcast Corporation by segment Comcast Corporation (CMCSA) is a global media and entertainment company with...
Analyze Comcast Corporation by segment Comcast Corporation (CMCSA) is a global media and entertainment company with operations divided into five major segments: Cable Communications (XFINITY) Cable Networks (USA Network, Syfy, E!, CNBC, others) Broadcast Television (NBC) Filmed Entertainment (Universal Pictures) Theme Parks (Universal) Revenue, operating income, and depreciation and amortization information for these segments for a recent year are as follows (in millions): Segment Revenue Operating Income Depreciation and Amortization Cable Communications $50,048 $12,439 $7,670       Cable Networks 10,464 2,964 745      ...
THis is all the information and problems are below: Business Segments The Company operates in the...
THis is all the information and problems are below: Business Segments The Company operates in the following three business segments: Consumer Floral, Gourmet Food and Gift Baskets, and BloomNet Wire Service. The Consumer Floral segment includes the operations of the Company’s flagship brand, 1-800-Flowers.com, FruitBouquets.com and Flowerama, while the Gourmet Food and Gift Baskets segment includes the operations of Harry & David (which includes Wolferman’s®, Moose Munch and Stockyards.com), Cheryl’s (which includes Mrs. Beasley’s), The Popcorn Factory, DesignPac and 1-800-Baskets....
Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale—a...
Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale—a cookbook, a travel guide, and a handy speller. Each book sells for $10. The publishing company’s most recent monthly income statement is given below: Product Line Total Company Cookbook Travel Guide Handy Speller   Sales $ 300,000 $ 90,000 $ 150,000 $ 60,000   Expenses:        Printing costs 102,000 27,000 63,000 12,000        Advertising 36,000 13,500 19,500 3,000        General sales 18,000 5,400 9,000 3,600        Salaries 33,000 18,000 9,000...
Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale—a...
Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale—a cookbook, a travel guide, and a handy speller. Each book sells for $13. The publishing company’s most recent monthly income statement is shown below. Product line Total Company Cookbook Travel Guide Handy Speller Sales $ 315,000 $ 96,000 $ 156,000 $ 63,000 Expenses: Printing costs 105,000 30,000 63,300 11,700 Advertising 39,000 13,800 21,000 4,200 General sales 18,900 5,760 9,360 3,780 Salaries 36,000 21,000 9,300...
Orange County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are...
Orange County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory overhead for Orange County Chrome is $213,389. The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours Stamping Department Automobile bumpers 558 803 Valve covers 295 557 Wheels 340 597 1,193 1,957 Plating Department Automobile bumpers 171 1,166 Valve covers 175...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...