McDonalds operates using a typical fast food operations, however is considering adding food trucks in order to increase business. Below is the CVP Income statement for Mcdonalds for the 1st quarter of 2020.

McDOnalds wants would like to remain using the same supplier for its meat; however, the J.K. farms is increasing its prices by $1/pound of meat. Each pound of meat makes 4 burgers (Hint: You will need to convert price per pound of meat to price per individual burger.) Due to recent growth, Mcdonalds has decided to hire a new head chef that would cost the company $25,000 per quarter for the new positions salary, as well additional kitchen space for an annual rent of $100,000 per year. Mcdonalds believes that it can reduce variable marketing expenses by $0.10 per burger by increasing fixed marketing expenses by $45,500. With this new marketing scheme, the company believes it can generate a 5% increase in sales volume all the while keeping the price of each burger at $5.00. The company wants to put these changes into place by the third quarter of 2020; however, it needs to answer a few questions internally before it decides to move forward. 1. Management wants to obtain an understanding of the current situation before any changes are implemented. Calculate the following:

a) Find the unit contribution margin as well as the contribution margin ratio before the changes are implemented.

b) Find the breakeven point in burgers (units) and in sales dollars before the changes are implemented. Round the answers up to the next whole number.

c) Find the new unit contribution margin as well as the contribution margin ratio after the changes are implemented.

d) Find the new breakeven in burgers (units) and in sales dollars after the changes are implemented. Round the answers up to the next whole number.

CVP Income Statement For the Quarter Ended March 31, 2020 $5,098,500 Sales Revenue ($5.00 per burger). Less Variable Expenses: _Cost of Goods Sold Sales & Marketing Expenses General & Administrative Expenses Contribution Margin Less Fixed Expenses: Sales & Marketing Expenses General & Administrative Expenses Operating Income $3,104,500 557,000 157,600 3.819,100 $1,279,400 $370,000 277,200 647,200 $632,200