Answer:
Contribution margin for Turner is $30,690
Contribution margin for Home Box Office is $35,165
Contribution margin for Warner Bros is $65,681
CM ratio:
Turner 62%
Home Box Office 65%
Warner Bros 77%
Explanation:
The computations of contribution margin and contribution margin ratio are as follows:
Time Warner Inc.
Turner Home Box Office Warner Bros total
$(miilion) $(miilion $(miilion) $(miilion)
Segment revenue 49,500 54,100 85,300 188,900
Variable costs (18,810) (18,935) (19,619) (57,364)
Contribution margin 30,690 35,165 65,681 131,536
CM ratio 62% 65% 77%
Variable costs as % of sales 0.38 0.35 0.23
CM ratio=contribution margin ratio=contribution margin/sales revenue
Find attached as well.
