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)

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:

Filmed Entertainment	35%
Networks	32%
Publishing	72%

Required:

A.

Determine the contribution margin and contribution margin ratio for each segment from the information given. Enter amounts in millions rounded to one decimal place - for example, enter 140,823,000 as 140.8. Round contribution margin ratios to whole percents for each segment from the above information. Enter all amounts as positive numbers. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

B.

Why is the contribution margin ratio for the Publishing segment smaller than for the other segments?

C.

Does your answer to (B) mean that the other segments are more profitable businesses than the Publishing segment?

Amount Descriptions
Contribution margin
Contribution margin ratio
Fixed costs
Income from operations
Revenues
Variable costs Determine the contribution margin and contribution margin ratio for each segment from the information given. Enter amounts in millions rounded to one decimal place - for example, enter 140,823,000 as 140.8. Round contribution margin ratios to whole percents for each segment from the above information. Enter all amounts as positive numbers. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.