6. Move to page 24 where Benetton's Contribution Margin Income Statement is shown for two separate segments, Textiles and Apparel. Compute Contribution Margin ratio for each segment for 2011. Round to 1 decimal place. 7. Which of the two segments is contributing more to covering fixed costs? 8. The Annual Report we are using was available because the Benetton Group was listed on the Italian stock exchange. Read the "Significant Events foot note on page 19 of the report. What happened after 2011? 9. Read the article, "Italy's Benetton pays $1.1 million to Rana Plaza disaster fund" and the Wikipedia article on the Savar Building Collapse. As a managerial accountant at Benetton, what could you have done to keep Benetton from having clothes produced in a factory that was so poorly built? List at least 2 things. Understand that this was a subcontractor, and not a direct hire of Benetton (millions of Euro) Revenues 2011 2,032 % 2010 100.0 2,053 % 100.0 Change (21) % (1.0) Materials and subcontracted work Payroll and related costs Industrial depreciation and amortization Other manufacturing costs Cost of sales 47 (2) 1.024 78 14 34 1.150 504 3.8 0.7 1.7 56.6 977 80 14 34 476 3.9 0.7 16 53.8 47 (19) (1.4) 13 4.1 1,105 45 882 43.4 948 46.2 (66) (6.9) Gross operating profit Distribution and transport Sales commissions 72 86 35 43 73 86 36 42 (1) (1.4) 03 Contribution margin 724 35.6 789 38.4 (65) (8.2) 85 27 43 Payroll and related costs Advertising and promotion Depreciaron and amortization Other expenses and income - of which non-recurring expenses/'income) General and operating expenses - of which non-recurring expenses/income) 181 58 88 248 5 575 5 8.9 28 43 123 02 28.3 02 175 55 89 294 32 613 32 143 16 29.8 1.6 6 33 3 44 (1) (0.2) (46) (156) (27) (857) (38) (6.2) (27) (857) Operating profit 149 73 176 8.6 (27) (15.4) Share of income/losses) of associated companies Financial (expenses/income Net foreign currency hedging (losses/gains and exchange differences (20) (10) ns 53 (1.0) (C.4) (0.1) (0.9) 0.6 (19) 12 1 (1) (22) ns Income before taxes 119 5.9 168 8.2 (49) (28.8) 2 Income taxes 42 2.1 65 32 (23) (347) Segment results - 2011 Eliminations Consolidated 2.032 (millions of Euro) Revenues from third parties Inter-segment revenues Total revenues Cost of sales Gross operating profit Selling costs Contribution margin General and operating expenses - of which non-recurring expenses/(income) Operating profit Apparel 1.913 2 1.915 1,057 858 153 705 566 / 139 Textile 119 85 204 179 25 7 18 8 (2) 10 (87) (87) (86) (0) (2) 1 1 2.032 1.150 882 158 724 575 5 149 7 Depreciation and amortiration Other non-monetary costs (net impairment/(reversals)) EBITDA 95 6 240 1 18 102 7 258 Segment results - 2010 Eliminations Consolidated 2.053 (millions of Euro) Revenues from third parties Inter-segment revenues Total revenues Cost of sales Gross operating profit Selling costs Contribution margin General and operating expenses - of which non-recurring expenses/(income) Operating profil Apparel 1.948 4 1,952 1,018 934 153 781 600 29 181 Textile 105 81 186 171 15 7 8 13 3 (5) (85) (85) (84) (0) (0) 2053 1.105 948 159 789 613 32 176 oraria 94 8 13 Segment results - 2010 Eliminations Consolidated 2.053 (millions of Euro) Revenues from third parties Inter-segment revenues Total revenues Cost of sales Gross operating profit Selling costs Contribution margin General and operating expenses - of which non-recurring expenses/income) Operating profit Apparel 1.948 4 1952 1,018 934 153 781 600 29 181 Textile 105 81 186 171 15 7 8 13 3 (5) (85) (85) (84) (0) (1) 2053 1,105 948 159 789 613 32 176 8 Depreciation and amortization Other non-monetary costs (net impairment/(reversals)) EBITDA 95 24 300 103 24 303 3 Apparel segment result (millions of Euro) Revenues from third parties Inter-segment revenues Total revenues Cost of sales Gross operating profit Selling costs Contribution margin General and operating expenses of which non-recurring expenses/income) Operating profit 2011 1.913 2 1.915 1.057 858 153 705 566 7 139 100.0 55.2 448 2010 1.948 4 1.952 1,018 934 153 781 600 29 181 Change % (35) (18) (2) (358) (37) (1.9) 39 3.9 (76) (8.2) (0.6) (76) (9.6) (34) (55) (22) (16.5) (42) (23.3) 100.0 52.1 479 7.9 400 307 1.5 93 8.0 36.B 295 0.4 73 EBITDA 240 125 300 15.4 (60) (200) Apparel segment result % (37) 3.9 (millions of Euro) Revenues from third parties Inter-segment revenues Total revenues Cost of sales Gross operating profit Selling costs Contribution margin General and operating expenses of which non-recurring expenses/income) Operating profit 2011 1.913 2 1.915 1.057 858 153 705 566 7 139 100.0 55.2 448 8.0 36.B 295 0.4 73 2010 1.948 4 1.952 1.018 934 153 781 600 29 181 100.0 52.1 479 79 40.0 307 1.5 93 Change % (35) (1.8) (2) (35.8) (1.9) 39 (76) (82) (0.6) (76) (96) (34) (55) (22) (76.5) (42) (233) EBITDA 240 125 300 154 (60) (200)