Contribution Margin and Contribution Margin RatioFor a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):SalesFood and packaging$28,900$8,649Payroll7,300Occupancy (rent, depreciation,7,881etc.)General, selling, and4,200administrative expenses$28,030$870Income from operationsAssume that the variable costs consist of food and packaging; payroll; and 40% of the general, selling, and administrative expenses.a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)millionb. What is Wicker Company's contribution margin ratio? Round your answer to one decimal place.%c. How much would income from operations increase if same-store sales increased by $1,700 million for the coming year, with no change in the contribution margin ratio or foxed costs? Round your answer to the closest million.million

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales Food and paper Payroll and employee benefits Occupancy and other expenses $21,000 $(2,600) (2,000) (4,200) General, selling, and administrative expenses (3,200) $(12,000) $9,000 Operating income Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? X million b. What is McDonald's contribution margin ratio? Round to one decimal place. x % c. How much would operating income increase if same-store sales increased by $1,000 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). X million
The contribution format income statement for Huerra Company for last year is given below. Total $1,006,000 603,600 Unit $ 50.30 30.18 402,400 20.12 322,400 16.12 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income 80,000 32,000 $ 48,000 4.00 1.60 $2.40 The company had average operating assets of $502,000 during the year. Required: 1. Compute the company's margin, turnover, and return on investment (ROI) for the period. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $93,000. 3. The company achieves a cost savings of $7,000 per year by using less costly materials. 4. The company…
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Contribution Margin and Contribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales Food and packaging Payroll Occupancy (rent, depreciation, etc.) General, selling, and admin. expenses Other expense Total expenses Operating income (loss) $4,310 3,800 4,190 2,200 290 % $14,500 (14,790) $(290) Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place. million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. and nistrative expenses. 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?
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Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 82,800 units during the year. Cover-to-Cover Company Biblio Files Company Contribution margin ratio (percent) Unit contribution margin Break-even sales (units) Break-even sales (dollars) $ %
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Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,310,000 1,313,000 2,997,000 2,200,000 $ 797,000 Department Hardware $ 3,130,000 901,000 2,229,000 1,360,000 $ 869,000 Linens $ 1,180,000 412,000 768,000 840,000 $ (72,000) A study indicates that $377,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 11% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)
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