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 $14,300 Food and packaging $(3,568) Payroll (3,600) Occupancy (rent, depreciation, etc.) (4,602) General, selling, and administrative expenses (2,100) $(13,870) Operating income $430 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)$ million b. What is McDonald's contribution margin ratio?% c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.$ million
Contribution Margin and Contribution Margin Ratio For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $14,300 Food and packaging $(3,568) Payroll (3,600) Occupancy (rent, depreciation, etc.) (4,602) General, selling, and administrative expenses (2,100) $(13,870) Operating income $430 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)$ million b. What is McDonald's contribution margin ratio?% c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.$ million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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 | $14,300 |
| Food and packaging | $(3,568) |
| Payroll | (3,600) |
| Occupancy (rent, |
(4,602) |
| General, selling, and administrative expenses | (2,100) |
| $(13,870) | |
| Operating income | $430 |
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 $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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education