Question
Contribution Margin and Contribution Margin Ratio For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales$32,200 Food and
Contribution Margin and Contribution Margin Ratio
For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales$32,200
Food and packaging$(14,170)
Payroll(8,100)
Occupancy (rent, depreciation, etc.)(4,260)
General, selling, and administrative expenses(4,700)
$(31,230)
Operating income$970
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.) $ million
b. What is McDonald's contribution margin ratio? %
c. How much would operating income increase if same-store sales increased by $1,900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $ million
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