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 $14,900 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 | $14,900 |
Food and packaging | $3,962 |
Payroll | 3,800 |
Occupancy (rent, depreciation, etc.) | 4,488 |
General, selling, and administrative expenses | 2,200 |
$14,450 | |
Income from operations | $450 |
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 $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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