Answers

Contribution Margin and Contribution Margin Ratio 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? Enter your answer in million, rounded to one decimal place. million b. What is Mcdonald's contribution margin ratio? Round your percentage answer to one decimal place. % c. Use the rounded contribution margin ratio value to answer the following question: 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