Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): JUST NEED E. I got the rest right Sales

For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): JUST NEED E. I got the rest right

Sales $16,488
Food and packaging $5,552
Payroll 4,400
Occupancy (rent, depreciation, etc.) 4,025
General, selling, and admin. expenses 2,434
Other expense 209
Total expenses (16,620)
Operating income (loss) $(132)

Assume that the variable costs consist of food and packaging, payroll, and 45% of the general, selling, and administrative expenses. JUST NEED E. I got the rest right

a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place.

5,440.70 million

b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. 33 %

c. Use the rounded contribution margin ratio value to answer the following question: how much would operating income increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs? 165 million

d. What would have been the operating income or loss for the recent year if sales had been $500 million more? $ 33 million

e. Use the rounded contribution margin ratio value to answer the following question: To achieve break even for the recent year, by how much would sales need to increase? $ _____million

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Accounting questions