Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $37,300 Food and packaging $(13,431) Payroll (9,400) Occupancy (rent, depreciation, etc.) (7,949) General, selling, and administrative expenses (5,400) $(36,180) Operating income $1,120 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 operating income increase if same-store sales increased by $2,200 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 (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $37,300 Food and packaging $(13,431) Payroll (9,400) Occupancy (rent, depreciation, etc.) (7,949) General, selling, and administrative expenses (5,400) $(36,180) Operating income $1,120 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 operating income increase if same-store sales increased by $2,200 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
Section: Chapter Questions
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![Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales
$37,300
Food and packaging
$(13,431)
Payroll
(9,400)
Occupancy (rent, depreciation, etc.)
(7,949)
General, selling, and administrative expenses
(5,400)
$(36,180)
Operating income
$1,120
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 operating income increase if same-store sales increased by $2,200 million for the coming year, with no change in the contribution
margin ratio or fixed costs? Round your answer to the closest million.
million
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3af213d9-cf0f-4165-81ac-17d2ef63c115%2Fcb229a57-85f0-42a7-b224-412f7f51e12d%2Fgfr7ltv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales
$37,300
Food and packaging
$(13,431)
Payroll
(9,400)
Occupancy (rent, depreciation, etc.)
(7,949)
General, selling, and administrative expenses
(5,400)
$(36,180)
Operating income
$1,120
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 operating income increase if same-store sales increased by $2,200 million for the coming year, with no change in the contribution
margin ratio or fixed costs? Round your answer to the closest million.
million
%24
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