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 $18,169.3 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 | $18,169.3 |
Food and packaging | $ 6,129.7 |
Payroll | 4,756.0 |
Occupancy (rent, depreciation, etc.) | 4,402.6 |
General, selling, and administrative expenses | 2,487.9 |
17,776.2 | |
Income from operations | $ 393.1 |
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 $500 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started