took Segment Contribution Margin Analysis The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year to wachsenent includes surfam which are indicated in parentheses Time Warner, Inc. Segment Revenues (in millions) Tumer (cable networks and digital media) $42,600 Home Box Office (pay television) 93,500 Warner Bros (films, television, and videos) 24,400 Assume that the variable costs as a percent of sales for each segment are as follows Turner Home Box Office 35% Warner Bros 28% a. Determine the contribution marginand contribution margin ratio for each segment from the information given when required, round to the nearest whole millionth (for example, round 5,686.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Warner Bros. Reveres Variable costs Contribution margin Contribution margin ratio (as a percent) b. Does your answer to (a) mean that the other segits are more profitable business? The higher contribution margin ratio of a segment should not be interpreted as being the most profitable segment. If the volume of business is not suffet to exceed the break even point, then the segments would be unprofitable In the final analysis, the fixed costs also should be considered in determining the overall profitability of the segments. The contribution margin ratio shows how sensitive the profit will be to changes in volume Previous