Segment Contribution Margin Analysis

The Walt Disney Company $($DIS$)$ is a global entertainment company that is organized into four business segments as follows:

Media Networks:

Television production and distribution, including ABC television network, ESPN, National Geographic.

Parks, Experiences, and Products:

Theme parks and resorts, including Walt Disney World and Disneyland; Experiences, including Disney Cruise Line and Disney Vacation Club; Products, including Disney and Pixar characters, comic books, and magazines.

Studio Entertainment:

Music and motion picture production and distribution, including Twentieth Century Studios, Marvel, and Lucasfilm.

Direct$-$to$-$Consumer & International:

Streaming services, including Disney$+,$ ESPN$+,$ and Hulu.

For a recent year, Disney reported the following segment results $($in millions$)$:

$\backslash$table$[[,\backslash$table$[[$Segment$],[$Media$],[$Networks$]],\backslash$table$[[$Segment$],[$Parks$,],[$Experiences$,],[$and Products$]],\backslash$table$[[$Segment$],[$Entertainment$]],\backslash$table$[[$Direct$-$to$-],[$Consumer$],[$& International$]]],[$Revenues$,$$$28,393,$$$16,502,$$$9,636,$$$16,967$

a$.$ Prepare a variable costing income statement for The Walt Disney Company by segment. Round all amounts to the nearest million.

The Walt Disney Company

Variable Costing Income Statement

$($in millions$)$

b$.$ Compute the contribution margin ratio for each segment. Round ratios to the nearest tenth of a percent.

$\backslash$table$[[,$Contribution Margin Ratio$],[$Media Networks,$\%],[$Parks$,$ Experiences, and Products,$\%],[$Studio Entertainment,$\%],[$Direct$-$to$-$Consumer & International,$\%]]$

c$.$ Based on your answers to $($a$)$ and $($b$),$ interpret the segment performance.

All segments generated a $$ contribution margin, even though the Parks, Experiences, and Products and Direct$-$to$-$Consumer & International segments generated operating

$-$ The Media Networks segment generated the $$ contribution margin and contribution margin ratio. The Parks, Experiences, and Products and Studio Entertainment segments generated approximately the $$ contribution margin ratios. However, because of its size, the Parks, Experiences, and Products segment generated $$ contribution margin than the Studio Entertainment segment. The Direct$-$to$-$Consumer & International segment generated the $$ contribution margin ratio anc $$ contribution margin. The recent COVID$-19$ pandemic $$ affected the preceding results. The Parks, Experiences, and Products and Studio Entertainment segments were $6$ affected. Thus, the preceding results are $$ of Disney's normal operations for these segments.