For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $26,100 Food and packaging $10,150 Payroll 6,600 Occupancy (rent, depreciation, etc.) 4,770 General, selling, and administrative expenses 3,800 $25,320 Income from operations $780 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.) X million b. What is McDonald's contribution margin ratio? X % c. How much would income from operations increase if same-store sales increased by $1,600 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. X million
For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions): Sales $26,100 Food and packaging $10,150 Payroll 6,600 Occupancy (rent, depreciation, etc.) 4,770 General, selling, and administrative expenses 3,800 $25,320 Income from operations $780 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.) X million b. What is McDonald's contribution margin ratio? X % c. How much would income from operations increase if same-store sales increased by $1,600 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. X 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
$26,100
Food and packaging
$10,150
Payroll
6,600
Occupancy (rent, depreciation, etc.)
4,770
General, selling, and administrative expenses
3,800
$25,320
Income from operations
$780
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.)
X million
b. What is McDonald's contribution margin ratio?
X %
c. How much would income from operations increase if same-store sales increased by $1,600 million for the coming year, with no change in the contribution margin ratio
or fixed costs? Round your answer to the closest million.
X million
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffe7f08cd-3d85-438e-ac9c-f64f1ecabc57%2Ff71ef0ca-faaf-4685-8bb4-036662a4d9f9%2Fbe5mqck_processed.jpeg&w=3840&q=75)
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
$26,100
Food and packaging
$10,150
Payroll
6,600
Occupancy (rent, depreciation, etc.)
4,770
General, selling, and administrative expenses
3,800
$25,320
Income from operations
$780
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.)
X million
b. What is McDonald's contribution margin ratio?
X %
c. How much would income from operations increase if same-store sales increased by $1,600 million for the coming year, with no change in the contribution margin ratio
or fixed costs? Round your answer to the closest million.
X million
%24
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