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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
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Phoniex University
Oct-2001 - Nov-2016
Segment contribution margin analysis
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.
Â
Time Warner, Inc. Segment Revenues (in millions)
Â
|
Filmed Entertainment (Warner Bros.) |
$14,204 |
|
Networks (CNN, HBO, WB) |
12,018 |
|
Publishing (Time, People, Sports Illustrated) |
3,436 |
Assume that the variable costs as a percent of sales for each segment are as follows:
Â
|
Filmed Entertainment |
35% |
|
Networks |
32% |
|
Publishing |
72% |
a.    Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percents) for each segment from the information given.
b.  Â
Why is the contribution margin ratio for the Publishing segment smaller than for the other segments?
c.   Â
Does your answer to (b) mean that the other segments are more profitable businesses than the Publishing segment?
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