Question
Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales $27,300 Food and
Contribution Margin and Contribution Margin Ratio
For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):
Sales | $27,300 |
Food and packaging | $8,153 |
Payroll | 6,900 |
Occupancy (rent, depreciation, etc.) | 7,427 |
General, selling, and administrative expenses | 4,000 |
$26,480 | |
Income from operations | $820 |
Assume that the variable costs consist of food and packaging; payroll; and 40% of the general, selling, and administrative expenses.
a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) $fill in the blank 1 million
b. What is Wicker Company's contribution margin ratio? Round your answer to one decimal place. fill in the blank 2 %
c. How much would income from operations increase if same-store sales increased by $1,600 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $fill in the blank 3 million
Break-Even Sales
BeerBev, Inc., reported the following operating information for a recent year:
Net sales | $10,752,000 |
Cost of goods sold | $2,688,000 |
Selling, general, and administrative expenses | 672,000 |
$3,360,000 | |
Income from operations | $ 7,392,000* |
*Before special items
In addition, assume that BeerBev sold 56,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $30,200.
When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place.
a. Compute the break-even number of barrels for the current year. fill in the blank 1 barrels
b. Compute the anticipated break-even number of barrels for the following year. fill in the blank 2 barrels
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