3. EX.20.10.ALGO

Contribution Margin and Contribution Margin Ratio

For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):

Sales	$27,200
Food and packaging	$(8,636)
Payroll	(6,900)
Occupancy (rent, depreciation, etc.)	(6,844)
General, selling, and administrative expenses	(4,000)
	$(26,380)
Operating income	$820

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 $1,600 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