1. For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):

Sales		$16,488
Food and packaging	$5,552
Payroll	4,400
Occupancy (rent, depreciation, etc.)	4,025
General, selling, and admin. expenses	2,434
Other expense	209
Total expenses		(16,620)
Operating income (loss)		$(132)

Assume that the variable costs consist of food and packaging, payroll, and 45% of the general, selling, and administrative expenses.

a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place. $fill in the blank 1 million

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

c. Use the rounded contribution margin ratio value to answer the following question: how much would operating income increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs? $fill in the blank 3 million

d. What would have been the operating income or loss for the recent year if sales had been $500 million more? $fill in the blank 4 million

e. Use the rounded contribution margin ratio value to answer the following question: To achieve break even for the recent year, by how much would sales need to increase? $fill in the blank 5 million

2. For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):

Sales		$15,000
Food and packaging	$6,180
Payroll	4,000
Occupancy (rent, depreciation, etc.)	2,520
General, selling, and admin. expenses	2,300
Other expense	300
Total expenses		(15,300)
Operating income (loss)		$(300)

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? Enter your answer in millions, rounded to one decimal place. $fill in the blank 1 million

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

c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? $fill in the blank 3 million

d. What would have been the operating income or loss for the recent year if sales had been $900 million more? $fill in the blank 4 million

e. To achieve break-even for the recent year, by how much would sales need to increase? Enter your anwer in million rounded to the nearest whole number. $fill in the blank 5 million

3. For the current year ending December 31, McAdams Industries expects fixed costs of $1,860,000, a unit variable cost of $105, and a unit selling price of $125.

a. Compute the anticipated break-even sales (units). fill in the blank 1 units

b. Compute the sales (units) required to realize operating income of $500,000. fill in the blank 2 units

4. For the current year ending December 31, McAdams Industries expects fixed costs of $462,000, a unit variable cost of $60, and a unit selling price of $90.

a. Compute the anticipated break-even sales (units). fill in the blank 1 units

b. Compute the sales (units) required to realize operating income of $105,000. fill in the blank 2 units

5. For the coming year, Bernardino Company anticipates a unit selling price of $85, a unit variable cost of $15, and fixed costs of $420,000.

Instructions:

a. Compute the anticipated break-even sales (units). fill in the blank 1 units

b. Compute the sales (units) required to realize operating income of $70,000. fill in the blank 2 units

c. Construct a cost-volume-profit graph on paper, assuming maximum sales of 10,000 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.

$1,000,000	Profit or Loss or Break-even
$800,000	Profit or Loss or Break-even
$600,000	Profit or Loss or Break-even
$400,000	Profit or Loss or Break-even
$200,000	Profit or Loss or Break-even

d. Determine the probable operating income (loss) if sales total 8,000 units. If required, use the minus sign to indicate a loss. $fill in the blank 8

Profit or Loss

5. For the coming year, Bernardino Company anticipates a unit selling price of $94, a unit variable cost of $47, and fixed costs of $385,400.

Instructions:

1. Compute the anticipated break-even sales in units. fill in the blank 1 units

2. Compute the sales (units) required to realize operating income of $197,400. fill in the blank 2 units

3. Construct a cost-volume-profit graph on paper, assuming maximum sales of 16,400 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.

$1,081,000	Break-even or Loss or Profit
$968,200	Break-even or Loss or Profit
$770,800	Break-even or Loss or Profit
$582,800	Break-even or Loss or Profit
$460,600	Break-even or LossProfit

4. Determine the probable operating income (loss) if sales total 13,100 units. If required, use the minus sign to indicate a loss. $fill in the blank 8

Profit or Loss