For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):Sales$12,718.9Food and packaging$ 4,033.5Payroll3,528.5Occupancy (rent, depreciation, etc.)2,847.6General, selling, and administrative expenses2,231.3 12,640.9Income from operations$ 78.0Assume 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 tenth of a million (one decimal place).$fill in the blank 1 millionb. What is McDonald's contribution margin ratio? Round your answer to one decimal place.fill in the blank 2 %c. How much would income from operations increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place).$fill in the blank 3 million ContentCengageNOWv2 | Online teachin xb Answered: Tashiro Inc. has decide XA v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=falseWeek 5 - Problem AssignmentеBookShow Me How1. EX.21.01Contribution Margin and Contribution Margin RatioFor a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):2. EX.21.03Sales$12,718.93. EX.21.05Food and packaging$ 4,033.54. EX.21.07Payroll3,528.5Occupancy (rent, depreciation, etc.)2,847.65. EX.21.09General, selling, and administrative expenses2,231.36. EX.21.1012,640.97. EX.21.11Income from operations$ 78.0Assume that the variable costs consist of food and packaging; payroll; and 40% of the general, selling, and administrative expenses.8. EX.21.14a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place).$millionb. What is McDonald's contribution margin ratio? Round your answer to one decimal place.%c. How much would income from operations increase if same-store sales increased by $500 million for the coming year, with no change inthe contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place).million11:07 PMO Type here to searchwDEL2/2/2021...

Answered: For a recent year, McDonald's…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):

Sales	$12,718.9
Food and packaging	$ 4,033.5
Payroll	3,528.5
Occupancy (rent, depreciation, etc.)	2,847.6
General, selling, and administrative expenses	2,231.3
	12,640.9
Income from operations	$ 78.0

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 tenth of a million (one decimal place).
$fill in the blank 1 million

b. What is McDonald's contribution margin ratio? Round your answer to one decimal place.
fill in the blank 2 %

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).
$fill in the blank 3 million

Content
CengageNOWv2 | Online teachin x
b Answered: Tashiro Inc. has decide X
A v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false
Week 5 - Problem Assignment
еBook
Show Me How
1. EX.21.01
Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
2. EX.21.03
Sales
$12,718.9
3. EX.21.05
Food and packaging
$ 4,033.5
4. EX.21.07
Payroll
3,528.5
Occupancy (rent, depreciation, etc.)
2,847.6
5. EX.21.09
General, selling, and administrative expenses
2,231.3
6. EX.21.10
12,640.9
7. EX.21.11
Income from operations
$ 78.0
Assume that the variable costs consist of food and packaging; payroll; and 40% of the general, selling, and administrative expenses.
8. EX.21.14
a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place).
$
million
b. What is McDonald's contribution margin ratio? Round your answer to one decimal place.
%
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
11:07 PM
O Type here to search
w
DEL
2/2/2021
...

Expert Solution

Step 1

Contribution margin can be referred to as the excess of revenue over the variable cost of the product. It represents the amount available to recover the fixed cost of the firm. A sales level at which the contribution margin is equal to the fixed cost of the firm is known as break even level.

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