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 $41,600 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 | $41,600 |
| Food and packaging | $16,180 |
| Payroll | 10,500 |
| Occupancy (rent, depreciation, etc.) | 7,570 |
| General, selling, and administrative expenses | 6,100 |
| $40,350 | |
| Income from operations | $1,250 |
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 income from operations 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
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
