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 (

image text in transcribed
Contribution margin and contribution margin ratio
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
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?
$
million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
X %
c. How much would operating income increase if same-store sales increased by $1,000 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).
$
millionFor a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):
Line Item Description Amount
Sales $22,000
Food and paper $(2,700)
Payroll and employee benefits (2,000)
Occupancy and other expenses (4,300)
General, selling, and administrative expenses (5,000)
Total $(14,000)
Operating income $8,000
Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin?
fill in the blank 1 of 1$
14,225
million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
fill in the blank 1 of 1
0.6
%
c. How much would operating income increase if same-store sales increased by $1,000 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).
image text in transcribed

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

Step: 3

blur-text-image

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

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

9th Edition

125972266X, 9781259722660

More Books

Students also viewed these Accounting questions