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 $19,207.8 Food and paper $(2,564.2) Payroll and employee benefits (2,416.4) Occupancy and other expenses (4,357.6) General, selling, and administrative expenses (2,545.6) Total $(11,883.8) Operating income $7,324.0 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? Round to the nearest tenth of a million (one decimal place). b. What is McDonald's contribution margin ratio? Round to one decimal place. c. How much would operating income increase if same-store sales increased by $800 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).
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 | $19,207.8 |
| Food and paper | $(2,564.2) |
| Payroll and employee benefits | (2,416.4) |
| Occupancy and other expenses | (4,357.6) |
| General, selling, and administrative expenses | (2,545.6) |
| Total | $(11,883.8) |
| Operating income | $7,324.0 |
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? Round to the nearest tenth of a million (one decimal place).
b. What is McDonald's contribution margin ratio? Round to one decimal place.
c. How much would operating income increase if same-store sales increased by $800 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).
calculation of contribution margin , contribution margin ratio and other requirement are as follows
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