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 $21,000 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 | $21,000 |
| Food and packaging | $7,320 |
| Payroll | 5,300 |
| Occupancy (rent, depreciation, etc.) | 4,650 |
| General, selling, and administrative expenses | 3,100 |
| $20,370 | |
| Income from operations | $630 |
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.) $fill in the blank 1 million
b. What is McDonald's contribution margin ratio? fill in the blank 2 %
c. How much would income from operations increase if same-store sales increased by $1,300 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $fill in the blank 3 million
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