6.3

Contribution Margin and Contribution Margin Ratio

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

Sales	$40,500
Food and packaging	$(13,360)
Payroll	(10,200)
Occupancy (rent, depreciation, etc.)	(9,830)
General, selling, and administrative expenses	(5,900)
	$(39,290)
Operating income	$1,210

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 $2,400 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