For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in...
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Accounting
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
Sales
$16,488
Food and packaging
$5,552
Payroll
4,400
Occupancy (rent, depreciation, etc.)
4,025
General, selling, and admin. expenses
2,434
Other expense
209
Total expenses
(16,620)
Operating income (loss)
$(132)
Assume that the variable costs consist of food and packaging, payroll, and 45% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place. $ million
b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. %
c. Use the rounded contribution margin ratio value to answer the following question: how much would operating income increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs? $ million
d. What would have been the operating income or loss for the recent year if sales had been $500 million more? $ million
e. Use the rounded contribution margin ratio value to answer the following question: To achieve break even for the recent year, by how much would sales need to increase? $ million
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