For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales Food and paper Payroll and employee benefits Occupancy and other expenses General, selling, and administrative expenses $21,000 $(2,800) (2,200) (4,000) (5,000) $(14,000) $7,000 Operating income Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administ a. What is McDonald's contribution margin? million b. What is McDonald's contribution margin ratio? Round to one decimal place. %
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales Food and paper Payroll and employee benefits Occupancy and other expenses General, selling, and administrative expenses $21,000 $(2,800) (2,200) (4,000) (5,000) $(14,000) $7,000 Operating income Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administ a. What is McDonald's contribution margin? million b. What is McDonald's contribution margin ratio? Round to one decimal place. %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Contribution margin and contribution margin ratio
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales
Food and paper
Payroll and employee benefits
Occupancy and other expenses
General, selling, and administrative expenses
$21,000
$(2,800)
(2,200)
(4,000)
(5,000)
$(14,000)
$7,000
Operating income
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?
million
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).
million](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7b77e47c-a066-4b92-9b17-4ca35daa027d%2F90f7ba74-adf2-4a40-8300-06c268ac195e%2For49874_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Contribution margin and contribution margin ratio
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales
Food and paper
Payroll and employee benefits
Occupancy and other expenses
General, selling, and administrative expenses
$21,000
$(2,800)
(2,200)
(4,000)
(5,000)
$(14,000)
$7,000
Operating income
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?
million
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).
million
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