Contribution Margin and Contribution Margin Ratio Obj. 2 For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):

Assume that the variable costs consist of food and paper, payroll and employee benefits, and 35% of the selling, general, and administrative expenses.

1. What is McDonalds contribution margin? Round to the nearest million.

2. What is McDonalds contribution margin ratio? Round to one decimal place.

3. How much would operating income increase if same-store sales increased by $250 million for the coming year, with no change in the contribution margin ratio or fixed costs?

4. What would have been the operating income or loss for the recent year if sales had been $250 million more?

$12,719 Sales by company operated restaurants Food and paper Payroll and employee benefits Occupancy and other expenses Selling, general, and administrative expenses Other operating income Net operating expenses Operating income (loss) $4,034 3,529 2,848 2,231 (1,163) (11,479) $ 1,240