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Contribution margin and contribution margin ratio For a recent year, McDonalds (MCD) company-owned...

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Accounting

Contribution margin and contribution margin ratio
For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):
Line Item Description Amount
Sales $20,000
Food and paper $(2,800)
Payroll and employee benefits (2,200)
Occupancy and other expenses (4,200)
General, selling, and administrative expenses (3,800)
Total $(13,000)
Operating income $7,000
Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin?
fill in the blank 1 of 1$
million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
fill in the blank 1 of 1
%
c. How much would operating income increase if same-store sales increased by $1,000 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place).
fill in the blank 1 of 1$
million
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