Question: Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions): Sales $18,602.5 Food and

Contribution Margin and Contribution Margin Ratio

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

Sales $18,602.5
Food and packaging $ 6,318.2
Payroll 4,710.3
Occupancy (rent, depreciation, etc.) 4,195.2
General, selling, and administrative expenses 2,445.2
17,668.9
Income from operations $ 933.6

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 tenth of a million (one decimal place). $_____ million

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

c. How much would income from operations increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). $_____ million

PS: Please provide a detailed solution.

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