Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Contribution margin and contribution margin ratio For a recent year, McDonald s ( MCD ) company - owned restaurants had the following sales and expenses

Contribution margin and contribution margin ratio
For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):
Line Item Description Amount
Sales $20,000
Food and paper $(2,500)
Payroll and employee benefits (2,300)
Occupancy and other expenses (4,300)
General, selling, and administrative expenses (2,900)
Total $(12,000)
Operating income $8,000
Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin?
fill in the blank 1 of 1$
million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
fill in the blank 1 of 1
%
c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place).
fill in the blank 1 of 1$
million

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Control Procedure For Statutory Financial Audit An Empirical Study

Authors: Siddhartha Sankar Saha, Mitrendu Narayan Roy

1st Edition

1787142272, 9781787142275

More Books

Students also viewed these Accounting questions