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Determine the contribution margin and contribution margin

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Reference no: EM132716614

Problem - The operating revenues of the three largest business segments for Time Warner, Inc. (TWX), 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) $11,364

Home Box Office (pay television) 5,890

Warner Bros. (films, television, and videos) 13,037

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

Turner 40%

Home Box Office 35%

Warner Bros. 25%

Required -

a. Determine the contribution margin (round to whole millions) and contribution margin ratio (round to whole percents) for each segment from the information given.

b. Does the segment with the highest contribution margin in (a) mean that it is the most profitable segment with the highest operating income?

Reference no: EM132716614

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