For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales     $34,200  Food and packaging   $11,734   Payroll 9,100   Occupancy (rent, depreciation, etc.) 8,166   General, selling, and admin. expenses    5,200   Other expense 680   Total expenses   (34,880) Operating income (loss)   $(680)   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? Enter your answer in million, rounded to one decimal place. $fill in the blank 1 million b.  What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. fill in the blank 2 % c.  How much would operating income increase if same-store sales increased by $2,100 million for the coming year, with no change in the contribution margin ratio or fixed costs? $fill in the blank 3 million d.  What would have been the operating income or loss for the recent year if sales had been $2,100 million more? $fill in the blank 4 million e.  To achieve break even for the recent year, by how much would sales need to increase? Enter your anwer in million rounded to the nearest whole number. $fill in the blank 5 million

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10E: Contribution margin and contribution margin ratio For a recent year, McDonalds (MCD) company-owned...
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For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):

Sales     $34,200 
Food and packaging   $11,734  
Payroll 9,100  
Occupancy (rent, depreciation, etc.) 8,166  
General, selling, and admin. expenses    5,200  
Other expense 680  
Total expenses   (34,880)
Operating income (loss)   $(680)

 

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? Enter your answer in million, rounded to one decimal place.
$fill in the blank 1 million

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

c.  How much would operating income increase if same-store sales increased by $2,100 million for the coming year, with no change in the contribution margin ratio or fixed costs?
$fill in the blank 3 million

d.  What would have been the operating income or loss for the recent year if sales had been $2,100 million more?
$fill in the blank 4 million

e.  To achieve break even for the recent year, by how much would sales need to increase? Enter your anwer in million rounded to the nearest whole number.
$fill in the blank 5 million

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