Contribution MarginandContribution Margin Ratio

For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):

Assume that thevariable costsconsist 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? Round to one decimal place. %

c. How much would income from operations increase if same-store sales increased by $811 million for the coming year, with no change in the contribution margin ratio orfixed costs? Round your answer to the closest million. $million

hints

a. Sales minus total variable costs equals contribution margin.

b. Contribution margin divided by sales equals contribution margin ratio.

c. Multiply the sales increase by the contribution margin percentage.

Contribution MarginandContribution Margin Ratio

For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):

Assume that thevariable costsconsist 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? Round to one decimal place. %

c. How much would income from operations increase if same-store sales increased by $811 million for the coming year, with no change in the contribution margin ratio orfixed costs? Round your answer to the closest million. $million

hints

a. Sales minus total variable costs equals contribution margin.

b. Contribution margin divided by sales equals contribution margin ratio.

c. Multiply the sales increase by the contribution margin percentage.