Question
Contribution MarginandContribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales$40,000 Food and packaging$12,560 Payroll 10,600
Contribution MarginandContribution Margin Ratio
For a recent year,McDugal'scompany-owned restaurants had the following sales and expenses (in millions):
Sales$40,000
Food and packaging$12,560
Payroll 10,600
Occupancy (rent, depreciation, etc.) 10,740
General, selling, and admin. expenses6,100
Other expense 800
Total expenses (40,800)
Operating income (loss) $(800)
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? Enter your answer in million, rounded to one decimal place.
$________________million
b.What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place.
________________%
c.How much would operating income increase if same-store sales increased by $2,400 million for the coming year, with no change in the contribution margin ratio orfixed costs?
$______________million
d.What would have been the operating income or loss for the recent year if sales had been $2,400 million more?
$_________________million
e.To achieve break even for the recent year, by how much would sales need to increase? Enter your anwer in million rounded to the nearest whole number.
$____________________million
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