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Segment Contribution Margin Analysis The Walt Disney Company (DIS) is a global entertainment company that is organized into four business segments as follows: Media Networks:

Segment Contribution Margin Analysis

The Walt Disney Company (DIS) is a global entertainment company that is organized into four business segments as follows:

Media Networks: Television production and distribution, including ABC television network, ESPN, National Geographic.

Parks, Experiences, and Products: Theme parks and resorts, including Walt Disney World and Disneyland; Experiences, including Disney Cruise Line and Disney Vacation Club; Products, including Disney and Pixar characters, comic books, and magazines.

Studio Entertainment: Music and motion picture production and distribution, including Twentieth Century Studios, Marvel, and Lucasfilm.

Direct-to-Consumer & International: Streaming services, including Disney+, ESPN+, and Hulu.

For a recent year, Disney reported the following segment results (in millions):

Line Item Description Segment Media Networks Segment Parks, Experiences, and Products Segment Entertainment Direct-to-Consumer & International
Revenues $28,393 $16,502 $9,636 $16,967
Operating expenses (19,200) (16,600) (7,100) (19,700)
Operating income $9,193 $(98) $2,536 $(2,733)

Assume the following percentages of total operating expenses for each segment are variable:

Segment Percentage of Variable Operating Expenses
Media Networks 75%
Parks, Experiences, and Products 60%
Studio Entertainment 80%
Direct-to-Consumer & International 70%

a. Prepare a variable costing income statement for The Walt Disney Company by segment. If required, use a minus sign to indicate an operating loss. Round all amounts to the nearest million.

Line Item Description Media Networks Parks, Experiences, and Products Studio Entertainment Direct-to-Consumer & International
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense $- Select - $- Select - $- Select - $- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable operating expenses - Select - - Select - - Select - - Select -
Contribution marginManufacturing marginFixed operating expensesSalesVariable commission expense $- Select - $- Select - $- Select - $- Select -
Contribution marginManufacturing marginSalesFixed operating expensesVariable commission expense - Select - - Select - - Select - - Select -
Operating income/loss $Operating income/loss $Operating income/loss $Operating income/loss $Operating income/loss

b. Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent.

Segment Contribution Margin Ratio
Media Networks %
Parks, Experiences, and Products %
Studio Entertainment %
Direct-to-Consumer & International %

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