Question: Contribution Margin and Contribution Margin Ratio For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $15,295.0 Food

Contribution Margin and Contribution Margin Ratio

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

Sales $15,295.0
Food and packaging $(4,896.9)
Payroll (4,134.2)
Occupancy (rent, depreciation, etc.) (3,667.7)
General, selling, and administrative expenses (2,384.5)
$(15,083.3)
Operating income $211.7

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). $fill in the blank 1 million

b. What is McDonald's contribution margin ratio? Round to one decimal place. fill in the blank 2 %

c. How much would operating income increase if same-store sales increased by $800 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). $fill in the blank 3 million

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock 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!