Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $30,800 Food and packaging $(8,264) Payroll (7,800) (9,316) Occupancy (rent, depreciation, etc.) General, selling, and administrative expenses (4,500) $(29,880) Operating income $920 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.) X million b. What is McDonald's contribution margin ratio? % 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. million Feedback Check My Work a. Sales minus total variable costs equals contribution margin. b. Contribution margin divided by sales equals contribution margin ratio. C. Multiply the sales increase by the contribution margin percentage. Check My Work Previous Next