Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's company-owned restaurants had the...
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Accounting
Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
Sales
$18,169.3
Food and packaging
$ 6,129.7
Payroll
4,756.0
Occupancy (rent, depreciation, etc.)
4,402.6
General, selling, and administrative expenses
2,487.9
17,776.2
Income from operations
$ 393.1
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). $ million
b. What is McDonald's contribution margin ratio? Round 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
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