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 $14,300 Food and packaging $(3,568) Payroll (3,600) Occupancy (rent, depreciation, etc.) (4,602) General, selling, and administrative expenses (2,100) $(13,870) Operating income $430 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)$ million b. What is McDonald's contribution margin ratio?% c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.$ million
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 | $14,300 |
| Food and packaging | $(3,568) |
| Payroll | (3,600) |
| Occupancy (rent, depreciation, etc.) | (4,602) |
| General, selling, and administrative expenses | (2,100) |
| $(13,870) | |
| Operating income | $430 |
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 million. (Give answer in millions of dollars.)
$ million
b. What is McDonald's contribution margin ratio?
%
c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$ million
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