Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $41,400 Food and packaging $15,766 Payroll 10,400 Occupancy (rent, depreciation, etc.) 7,994 General, selling, and administrative expenses 6,000 $40,160 Income from operations $1,240 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)$ million b. What is McDonald's contribution margin ratio? % c. How much would income from operations increase if same-store sales increased by $2,500 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.$ 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 $41,400 Food and packaging $15,766 Payroll 10,400 Occupancy (rent, depreciation, etc.) 7,994 General, selling, and administrative expenses 6,000 $40,160 Income from operations $1,240 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)$ million b. What is McDonald's contribution margin ratio? % c. How much would income from operations increase if same-store sales increased by $2,500 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.$ million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):
| Sales | $41,400 |
| Food and packaging | $15,766 |
| Payroll | 10,400 |
| Occupancy (rent, |
7,994 |
| General, selling, and administrative expenses | 6,000 |
| $40,160 | |
| Income from operations | $1,240 |
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 $2,500 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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