For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $17,900 Food and packaging $5,200 Payroll 4,500 Occupancy (rent, depreciation, etc.) 5,060 General, selling, and administrative expenses 2,600 $17,360 Income from operations $540 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.) $fill in the blank 1 million b. What is McDonald's contribution margin ratio? fill in the blank 2 % c. How much would income from operations increase if same-store sales increased by $1,100 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $fill in the blank 3 million
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $17,900 Food and packaging $5,200 Payroll 4,500 Occupancy (rent, depreciation, etc.) 5,060 General, selling, and administrative expenses 2,600 $17,360 Income from operations $540 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.) $fill in the blank 1 million b. What is McDonald's contribution margin ratio? fill in the blank 2 % c. How much would income from operations increase if same-store sales increased by $1,100 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $fill in the blank 3 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 | $17,900 |
| Food and packaging | $5,200 |
| Payroll | 4,500 |
| Occupancy (rent, |
5,060 |
| General, selling, and administrative expenses | 2,600 |
| $17,360 | |
| Income from operations | $540 |
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.)
$fill in the blank 1 million
b. What is McDonald's contribution margin ratio?
fill in the blank 2 %
c. How much would income from operations increase if same-store sales increased by $1,100 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$fill in the blank 3 million
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