Question: Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales $33,500 Food and

Contribution Margin and Contribution Margin Ratio

For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):

Sales $33,500
Food and packaging $13,995
Payroll 8,500
Occupancy (rent, depreciation, etc.) 5,105
General, selling, and administrative expenses 4,900
  $32,500
Income from operations $1,000

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a.   What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)
$ million

b.   What is Wicker Company's contribution margin ratio? Round to one decimal place.
 %

c.   How much would income from operations increase if same-store sales increased by $2,000 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$ million

Step by Step Solution

3.46 Rating (146 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

To solve this question well calculate the contribution margin contribution margin ratio and determin... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!