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 $30,100 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 $30,100
Food and packaging $(7,496)
Payroll (7,600)
Occupancy (rent, depreciation, etc.) (9,704)
General, selling, and administrative expenses (4,400)
$(29,200)
Operating income $900

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 operating income increase if same-store sales increased by $1,800 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

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!