Contribution margin and contribution margin ratio For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions): Line Item Description Amount Sales $20,000 Food and paper $(2,800) Payroll and employee benefits (2,400) Occupancy and other expenses (4,100) General, selling, and administrative expenses (2,700) Total $(12,000) Operating income $8,000 Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? fill in the blank 1 of 1$ million b. What is McDonald's contribution margin ratio? Round to one decimal place. fill in the blank 1 of 1 % c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). fill in the blank 1 of 1$ 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): Line Item Description Amount Sales $20,000 Food and paper $(2,800) Payroll and employee benefits (2,400) Occupancy and other expenses (4,100) General, selling, and administrative expenses (2,700) Total $(12,000) Operating income $8,000 Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? fill in the blank 1 of 1$ million b. What is McDonald's contribution margin ratio? Round to one decimal place. fill in the blank 1 of 1 % c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). fill in the blank 1 of 1$ 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):
| Line Item Description | Amount |
|---|---|
| Sales | $20,000 |
| Food and paper | $(2,800) |
| Payroll and employee benefits | (2,400) |
| Occupancy and other expenses | (4,100) |
| General, selling, and administrative expenses | (2,700) |
| Total | $(12,000) |
| Operating income | $8,000 |
Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin?
fill in the blank 1 of 1$ million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
fill in the blank 1 of 1 %
c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place).
fill in the blank 1 of 1$ million
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