For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales
Question:
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales ................................................................. $16,488
Food and packaging ........................... $5,552
Payroll .............................................4, 400
Occupancy (rent, depreciation, etc.) ..........4,025
General, selling, and admin. Expenses .......2,434
Other expense ......................................209
Total expenses ......................................................... (16,620)
Operating income (loss).......................................... $ (132)
Assume that the variable costs consist of food and packaging, payroll, and 45% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? Round to the nearest million.
b. What is McDonald's contribution margin ratio? Round to one decimal place.
c. How much would operating income increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs?
d. What would have been the operating income or loss for the recent year if sales had been $500 million more?
e. To achieve break even for the recent year, by how much would sales need to increase?
Contribution MarginContribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
a Sales in millions 164880 Variable costs in millions Food and packaging 55520 Payroll 44000 General ...View the full answer
