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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

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 $19,000
Food and paper $(3,000)
Payroll and employee benefits (2,000)
Occupancy and other expenses (4,200)
General, selling, and administrative expenses (2,800)
Total $(12,000)
Operating income $7,000

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 $800 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). fill in the blank 1 of 1$ million

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