Question
Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $32,700 Food and
Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):
Sales | $32,700 |
Food and packaging | $13,751 |
Payroll | 8,200 |
Occupancy (rent, depreciation, etc.) | 4,969 |
General, selling, and administrative expenses | 4,800 |
$31,720 | |
Income from operations | $980 |
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 income from operations increase if same-store sales increased by $2,000 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $ million I have figured out the first two but I cannot figure out section c.
Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $32,700 $13,751 Food and packaging Payroll 8,200 4,969 Occupancy (rent, depreciation, etc.) General, selling, and administrative expenses 4,800 $31,720 Income from operations $980 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.) $ 8,829 million b. What is McDonald's contribution margin ratio? 27 % c. How much would income from operations increase if same-store sales increased by $2,000 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. millionStep by Step Solution
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