Contribution Margin and Contribution Margin Ratio

For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):

Sales$41,300

Food and packaging$(13,632)

Payroll(10,400)

Occupancy (rent, depreciation, etc.)(10,028)

General, selling, and administrative expenses(6,000)

$(40,060)

Operating income$1,240

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

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

b. What is McDonald's contribution margin ratio? %

c. How much would operating income increase if same-store sales increased by $2,500 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $ million