Segment Profitability Analysis

The marketing segment sales for Caterpillar Inc. (CAT) for a recent year follow:

	Caterpillar Inc. Machinery and Engines Marketing Segment Sales (in millions)
	Building Construction Products		Cat Japan		Core Components		Earth moving		Electric Power		Excavation		Large Power Systems		Logistics		Marine & Petroleum Power		Mining		Turbines
Sales	$2,217		$1,225		$1,234		$5,045		$2,847		$4,562		$2,885		$659		$2,132		$3,975		$3,321

In addition, assume the following information:

	Building Construction Products		Cat Japan		Core Components		Earth moving		Electric Power		Excavation		Large Power Systems		Logistics		Marine & Petroleum Power		Mining		Turbines
Variable cost of goods sold as a percent of sales	45%		55%		49%		51%		54%		52%		53%		50%		50%		52%		48%
Dealer commissions as a percent of sales	9%		11%		8%		8%		10%		6%		5%		10%		9%		7%		9%
Variable promotion expenses (in millions)	310		120		150		600		200		600		300		75		270		480		400

a. Use the sales information and the additional assumed information to prepare a contribution margin by segment report. Round answers to two decimal places, except for contribution margin ratio, which should be rounded to one decimal place. Enter all amounts as positive numbers.

Caterpillar Inc.
Contribution Margin by Segment (assumed)
(in millions, except ratio figures)
	Building Construction Products	Cat Japan	Core Components	Earthmoving	Electric Power	Excavation	Large Power Systems	Logistics	Marine and Petroleum Power	Mining	Turbines
Sales	$fill in the blank 71dcf9ffc06dffd_1	$fill in the blank 71dcf9ffc06dffd_2	$fill in the blank 71dcf9ffc06dffd_3	$fill in the blank 71dcf9ffc06dffd_4	$fill in the blank 71dcf9ffc06dffd_5	$fill in the blank 71dcf9ffc06dffd_6	$fill in the blank 71dcf9ffc06dffd_7	$fill in the blank 71dcf9ffc06dffd_8	$fill in the blank 71dcf9ffc06dffd_9	$fill in the blank 71dcf9ffc06dffd_10	$fill in the blank 71dcf9ffc06dffd_11
Variable cost of goods sold	fill in the blank 71dcf9ffc06dffd_12	fill in the blank 71dcf9ffc06dffd_13	fill in the blank 71dcf9ffc06dffd_14	fill in the blank 71dcf9ffc06dffd_15	fill in the blank 71dcf9ffc06dffd_16	fill in the blank 71dcf9ffc06dffd_17	fill in the blank 71dcf9ffc06dffd_18	fill in the blank 71dcf9ffc06dffd_19	fill in the blank 71dcf9ffc06dffd_20	fill in the blank 71dcf9ffc06dffd_21	fill in the blank 71dcf9ffc06dffd_22
Manufacturing margin	$fill in the blank 71dcf9ffc06dffd_23	$fill in the blank 71dcf9ffc06dffd_24	$fill in the blank 71dcf9ffc06dffd_25	$fill in the blank 71dcf9ffc06dffd_26	$fill in the blank 71dcf9ffc06dffd_27	$fill in the blank 71dcf9ffc06dffd_28	$fill in the blank 71dcf9ffc06dffd_29	$fill in the blank 71dcf9ffc06dffd_30	$fill in the blank 71dcf9ffc06dffd_31	$fill in the blank 71dcf9ffc06dffd_32	$fill in the blank 71dcf9ffc06dffd_33
Dealer commissions	$fill in the blank 71dcf9ffc06dffd_34	$fill in the blank 71dcf9ffc06dffd_35	$fill in the blank 71dcf9ffc06dffd_36	$fill in the blank 71dcf9ffc06dffd_37	$fill in the blank 71dcf9ffc06dffd_38	$fill in the blank 71dcf9ffc06dffd_39	$fill in the blank 71dcf9ffc06dffd_40	$fill in the blank 71dcf9ffc06dffd_41	$fill in the blank 71dcf9ffc06dffd_42	$fill in the blank 71dcf9ffc06dffd_43	$fill in the blank 71dcf9ffc06dffd_44
Variable promotion expenses	fill in the blank 71dcf9ffc06dffd_45	fill in the blank 71dcf9ffc06dffd_46	fill in the blank 71dcf9ffc06dffd_47	fill in the blank 71dcf9ffc06dffd_48	fill in the blank 71dcf9ffc06dffd_49	fill in the blank 71dcf9ffc06dffd_50	fill in the blank 71dcf9ffc06dffd_51	fill in the blank 71dcf9ffc06dffd_52	fill in the blank 71dcf9ffc06dffd_53	fill in the blank 71dcf9ffc06dffd_54	fill in the blank 71dcf9ffc06dffd_55
Variable selling expenses	$fill in the blank 71dcf9ffc06dffd_56	$fill in the blank 71dcf9ffc06dffd_57	$fill in the blank 71dcf9ffc06dffd_58	$fill in the blank 71dcf9ffc06dffd_59	$fill in the blank 71dcf9ffc06dffd_60	$fill in the blank 71dcf9ffc06dffd_61	$fill in the blank 71dcf9ffc06dffd_62	$fill in the blank 71dcf9ffc06dffd_63	$fill in the blank 71dcf9ffc06dffd_64	$fill in the blank 71dcf9ffc06dffd_65	$fill in the blank 71dcf9ffc06dffd_66
Contribution margin	$fill in the blank 71dcf9ffc06dffd_67	$fill in the blank 71dcf9ffc06dffd_68	$fill in the blank 71dcf9ffc06dffd_69	$fill in the blank 71dcf9ffc06dffd_70	$fill in the blank 71dcf9ffc06dffd_71	$fill in the blank 71dcf9ffc06dffd_72	$fill in the blank 71dcf9ffc06dffd_73	$fill in the blank 71dcf9ffc06dffd_74	$fill in the blank 71dcf9ffc06dffd_75	$fill in the blank 71dcf9ffc06dffd_76	$fill in the blank 71dcf9ffc06dffd_77
Contribution margin ratio	fill in the blank 71dcf9ffc06dffd_78%	fill in the blank 71dcf9ffc06dffd_79%	fill in the blank 71dcf9ffc06dffd_80%	fill in the blank 71dcf9ffc06dffd_81%	fill in the blank 71dcf9ffc06dffd_82%	fill in the blank 71dcf9ffc06dffd_83%	fill in the blank 71dcf9ffc06dffd_84%	fill in the blank 71dcf9ffc06dffd_85%	fill in the blank 71dcf9ffc06dffd_86%	fill in the blank 71dcf9ffc06dffd_87%	fill in the blank 71dcf9ffc06dffd_88%

b. Prepare a table showing the manufacturing margin, dealer commissions, and variable promotion expenses as a percent of sales for each segment. Round percents to one decimal place, if required. Enter all amounts as positive numbers.

Caterpillar Inc.
Contribution Margin by Segment (assumed)
(in millions, except ratio figures)
	Building Construction Products	Cat Japan	Core Components	Earthmoving	Electric Power	Excavation	Large Power Systems	Logistics	Marine and Petroleum Power	Mining	Turbines
Manufacturing margin	fill in the blank 4e2a8ff7205ffac_1%	fill in the blank 4e2a8ff7205ffac_2%	fill in the blank 4e2a8ff7205ffac_3%	fill in the blank 4e2a8ff7205ffac_4%	fill in the blank 4e2a8ff7205ffac_5%	fill in the blank 4e2a8ff7205ffac_6%	fill in the blank 4e2a8ff7205ffac_7%	fill in the blank 4e2a8ff7205ffac_8%	fill in the blank 4e2a8ff7205ffac_9%	fill in the blank 4e2a8ff7205ffac_10%	fill in the blank 4e2a8ff7205ffac_11%
Dealer commissions	fill in the blank 4e2a8ff7205ffac_12%	fill in the blank 4e2a8ff7205ffac_13%	fill in the blank 4e2a8ff7205ffac_14%	fill in the blank 4e2a8ff7205ffac_15%	fill in the blank 4e2a8ff7205ffac_16%	fill in the blank 4e2a8ff7205ffac_17%	fill in the blank 4e2a8ff7205ffac_18%	fill in the blank 4e2a8ff7205ffac_19%	fill in the blank 4e2a8ff7205ffac_20%	fill in the blank 4e2a8ff7205ffac_21%	fill in the blank 4e2a8ff7205ffac_22%
Variable promotion expenses	fill in the blank 4e2a8ff7205ffac_23%	fill in the blank 4e2a8ff7205ffac_24%	fill in the blank 4e2a8ff7205ffac_25%	fill in the blank 4e2a8ff7205ffac_26%	fill in the blank 4e2a8ff7205ffac_27%	fill in the blank 4e2a8ff7205ffac_28%	fill in the blank 4e2a8ff7205ffac_29%	fill in the blank 4e2a8ff7205ffac_30%	fill in the blank 4e2a8ff7205ffac_31%	fill in the blank 4e2a8ff7205ffac_32%	fill in the blank 4e2a8ff7205ffac_33%
Contribution margin ratio	fill in the blank 4e2a8ff7205ffac_34%	fill in the blank 4e2a8ff7205ffac_35%	fill in the blank 4e2a8ff7205ffac_36%	fill in the blank 4e2a8ff7205ffac_37%	fill in the blank 4e2a8ff7205ffac_38%	fill in the blank 4e2a8ff7205ffac_39%	fill in the blank 4e2a8ff7205ffac_40%	fill in the blank 4e2a8ff7205ffac_41%	fill in the blank 4e2a8ff7205ffac_42%	fill in the blank 4e2a8ff7205ffac_43%	fill in the blank 4e2a8ff7205ffac_44%

c. All of the following are contributing reasons that Cat Japan is the poorest performing segment except: