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.

Time Warner, Inc.

Segment Revenues

$($in millions$)$

Turner $($cable networks and digital media$)$

$$14,700$

$68,500$

$20,600$

Home Box Office $($pay television$)$

$68,500$

Warner Bros. $($films$,$ television, and videos$)$

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

Turner

$43\%$

$37\%$

$25\%$

Home Box Office

Warner Bros.

a$.$ Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth $($for example, round $5,688\mathrm{.}7$ to $5,689).$ Round contribution margin ratio to whole percents for each segment from the information given.

Revenues

Variable costs

Contribution margin

b$.$ Does your answer to $($a$)$ mean that the other segments are more profitable businesses?