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 $18,602.5 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 | $18,602.5 |
Food and packaging | $ 6,318.2 |
Payroll | 4,710.3 |
Occupancy (rent, depreciation, etc.) | 4,195.2 |
General, selling, and administrative expenses | 2,445.2 |
17,668.9 | |
Income from operations | $ 933.6 |
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 tenth of a million (one decimal place). $_____ million
b. What is McDonald's contribution margin ratio? Round to one decimal place. ____%
c. How much would income from operations increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). $_____ million
PS: Please provide a detailed solution.
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