Question
For a recent year, McDooley's, a family-owned group of restaurants, had the following sales and expenses: Line Item Description Amount Amount Sales by company-operated restaurants
For a recent year, McDooley's, a family-owned group of restaurants, had the following sales and expenses:
Line Item Description | Amount | Amount |
---|---|---|
Sales by company-operated restaurants | $287,000 | |
Food and paper | $99,140 | |
Payroll and employee benefits | 68,700 | |
Occupancy and other expenses | 39,380 | |
Selling, general, and administrative expenses | 39,600 | |
Other operating expenses (income) | 17,220 | |
Net operating expenses | (264,040) | |
Operating income (loss) | $22,960 |
Assume that the variable costs consist of food and paper, payroll and employee benefits, and 40% of the selling, general, and administrative expenses.
a. What is McDooley's contribution margin?
b. What is McDooley's contribution margin ratio? Round your percentage answer to one decimal place. ___%
c. How much would operating income increase if the stores sales increased by $5,700 for the coming year, with no change in the contribution margin ratio or fixed costs?
d. What would have been the operating income or loss for the recent year if sales had been $5,700 more? Use a minus sign to indicate an operating loss.
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