Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $15,700 Food and packaging $4,029 Payroll 4,000 Occupancy (rent, depreciation, etc.) 4,901 General, selling, and administrative expenses 2,300 $15,230 Income from operations $470 Assume that the variable costs consist 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? c. How much would income from operations increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. million
Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $15,700 Food and packaging $4,029 Payroll 4,000 Occupancy (rent, depreciation, etc.) 4,901 General, selling, and administrative expenses 2,300 $15,230 Income from operations $470 Assume that the variable costs consist 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? c. How much would income from operations increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. million
Chapter1: Financial Statements And Business Decisions
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Contribution Margin and Contribution Margin Ratio
Transcribed Image Text:Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):
Sales
$15,700
Food and packaging
$4,029
Payroll
4,000
Occupancy (rent, depreciation, etc.)
4,901
General, selling, and administrative expenses
2,300
$15,230
Income from operations
$470
Assume that the variable costs consist 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?
%
c. How much would income from operations increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
million
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