For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions): Sales $18,169.3 Food and packaging $ 6,129.7 Payroll 4,756.0 Occupancy (rent, depreciation, etc.) 4,402.6 General, selling, and administrative expenses 2,487.9 17,776.2 Income from operations $ 393.1 Assume that the variable costs coisist 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 tenth of a million (one decimal place). 6,288.4 million b. What is McDonald's contribution margin ratio? Round to one decimal place. 34.6 % C. How much would income from operations increase if same-store sales increased by $500 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). million
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions): Sales $18,169.3 Food and packaging $ 6,129.7 Payroll 4,756.0 Occupancy (rent, depreciation, etc.) 4,402.6 General, selling, and administrative expenses 2,487.9 17,776.2 Income from operations $ 393.1 Assume that the variable costs coisist 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 tenth of a million (one decimal place). 6,288.4 million b. What is McDonald's contribution margin ratio? Round to one decimal place. 34.6 % C. How much would income from operations increase if same-store sales increased by $500 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). million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer c with explanations thx
Transcribed Image Text:Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
Sales
$18,169.3
Food and packaging
$ 6,129.7
Payroll
4,756.0
Occupancy (rent, depreciation, etc.)
4,402.6
General, selling, and administrative expenses
2,487.9
17,776.2
Income from operations
$393.1
Assume that the variable costs corisist 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 tenth of a million (one decimal place).
6,288.4 million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
34.6
%
C. How much would income from operations increase if same-store sales increased by $500 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).
million
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