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 coisist 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). 6,288.4 million b. What is McDonald's contribution margin ratio? Round to one decimal place. 34.6 % 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

Question
Please answer c with explanations thx
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 coisist 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).
6,288.4
million
b. What is McDonald's contribution margin ratio? Round to one decimal place.
34.6
%
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
Expand
Transcribed Image Text

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 coisist 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). 6,288.4 million b. What is McDonald's contribution margin ratio? Round to one decimal place. 34.6 % 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

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Cost Volume Profit Analysis

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Solvency and Profitability Trend Analysis (Part A is the only one I got incorrect, let me know what ...

A: Return on total assets = (Net Income + Interest expense)/ Average Total assets where, Average Total ...

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A: Gain on sale of plant asset=Sale procced - Book value=308,200-205,000=103,200

Q: The Matsui Lubricants plant uses the weighted-average method to account for its work-in-process inve...

A: Under weighted-average method, units completed and transferred out are 100% complete with respect to...

Q: Discuss:  Special Business Forms and Contract Liability The city of Papagos, Arizona, had a deterior...

A: Contract: A contract is a legally enforceable agreement between two or more entities to perform an a...

Q: Hello question is attached, thanks.

A: Budgeting: It is a process of planning the work to be performed. Under this process a formal plan is...

Q: Which of the following will not result in an increase in return on investment (ROI), assuming other ...

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in ea...

Q: 4. An equipment costs P8,000.00 has an economic life of 8 years and a salvage value of P400.00 at th...

A: Definition: Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived op...

Q: The following was taken from Stickers Corp.’s accounting records for the year ended December 31, 201...

A: Raw material used = Raw material purchased - Increase in raw material inventory

Q: From the following transactions for Casio Company, find the required balances for the month ended No...

A: Cash basis accounting: In cash basis accounting , revenue are recognized when payment is received an...

Q: The general ledger of Megan Corporation as of December 31, 2018, includes the following accounts:   ...

A: An intangible object is something that cannot be touched, is hard to describe, or assign an exact va...

Q: The following partial work sheet covers the affairs of Masanto and Company for the year ended June 3...

A: Journal:   Journal is the book of original entry. Journal consists of the day today financial transa...

Q: Luna Company calculates its predetermined rates using practical volume, which is 288,000 units. The ...

A: This numerical has covered the concept of Variance Analysis. 

Q: On April 1, Year 1, Brandi Corporation issued $20,000,000 of 5-year, 9% bondsat a market interest ra...

A: Premium on Bonds Payable = Issue value of bonds - Face value of Bonds = $20,811,010 - $20,000,000 = ...

Q: 10. A business operated at 100% of capacity during its first month, with the following results: S...

A: Contribution margin:   Contribution margin is a product's price minus all associated variable costs,...

Q: On January 1, 2020, a machine was purchased for $1.060,000 by Marin Co. The machine is expected to h...

A: Year Annual Payments PVIF @ 9 % Present value Interest 1 250000 1 250000 0 2 250000 0.9174 22935...

Q: Accrued Product Warranty Fosters Manufacturing Co. warrants its products for one year. The estimated...

A: Warranty expenses has to be booked as per the estimate of warranty claims in past period.  

Q: CPA Services - Profitability Analysis Hy and Lowe is a public accounting firm that offers two primar...

A: Solution: Traditional costing is the more simplest method which typically delivers less accuracy in ...

Q: PLEASE USE ACCOUNTS FROM THIS LIST Accumulated Other Comprehensive IncomeAllowance for Investment Im...

A: Journal entry: It is the process of recording and summarizing business economic and non-economic tra...

Q: Stockton Company Adjusted Trial Balance December 31 Cash 6,027 Accounts Receivable 2,599 Prepaid Exp...

A: Retained earnings are surplus profits left to the company after paying dividends. Retained earnings ...

Q: Here is the partial work sheet for Eckland Stereo: Required:  4. Determine the current ratio (carry ...

A: Formula: Current ratio = Current Assets / Current liabilities Division of current liabilities with c...

Q: Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreeme...

A: Journal entries are the entries to be recorded in the accounting books of the business for all the f...

Q: Erza Company has a P180,000, 10%, 90-day note receivable outstanding at December 31. The note is dat...

A: Interest receivable is interest accrued but not received. Interest receivable is an asset. Increase ...

Q: I need help with Question 3 and 1 Please to show the working out. Thanks.     1. Reconstruct the com...

A: Gain on sale of Equipment=Sale proceeds-Book value of the plant=120,000-100,000=20,000

Q: Lee Sutherlin is a self-employed electrical consultant. He estimates his annual net earnings at $31,...

A: Social Security tax = Annual net earnings x Social Security tax rate Medicare tax  = Annual net earn...

Q: Hello question is attached, thanks.

A: Profit variance analysis: It shows and determine the causes behind the changes in the profit of the ...

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A: Comparative statement is the one that shows the variation between the amounts of balance sheet items...

Q: Oasis Company adds all materials at the beginning of itsmanufacturing process. Production informatio...

A:                     beginning       ending         work in process       working process       ...

Q: Hi, I need help with this. It is just for practice for myself

A: Inventory: It refers to the items held by an organization which were in various forms like raw mater...

Q: Record journal entries for the following purchase transactions of Flower Company. Oct. 13 Purchased ...

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in...

Q: Simple Things Industries Ltd. Comparative Balance Sheet December 31, 2014 and 2013   2...

A: Increase / (decrease) amount has to be determined by deducting 2013 dollar amount from 2014 dollar a...

Q: The coke company sales around in the year of 2019 OMR 300,000. But unfortunately damaged broken coke...

A: This numerical has covered the concept of Net Profit Ratio.

Q: A business has been accounting for its bad A/R using the Allowance Method. For the last 5 years, the...

A: Allowance for Doubtful Accounts: Allowance for doubtful accounts is determined as the reduction in ...

Q: The yield to maturity (YTM) on 1-year zero-coupon bonds is 6% and the YTM on 2-year zeros is 7%. The...

A: Net Profit refers to the amount of profit remains after deducting all the costs or expenses or  afte...

Q: Outside of payroll, inventory is a very large expense for firms. Identify and discuss at least three...

A: Inventory:   Inventory for a business refers to stock in hand, work in process, raw materials, finis...

Q: Wallace Inc. collects 90% of its sales on account in the month of the sale and 10% in the month foll...

A: Cash collection from September sales = September sales on credit x 10% = $276,000 x 10% = $27,600

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A: Following is the requisite Comparative balance sheet and Cash flow statement

Q: 5. Record the following transactions for the month of November 2020 post to the appropriate ledger a...

A:   JOURNAL Date Particulars Debit Credit     (RM) (RM) Nov 1 Bank A/c      ...

Q: Darius Manufacturing Company manufactures and sells parts for various musical gadgets. The businesse...

A: (a) Calculation of number of units sold in 2018 is as follows:

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A:            Statement of Cash flow is one of the main financial statement which reports Cash inflow a...

Q: Current Position Analysis The following data were taken from the balance sheet of Nilo Company at th...

A: Click to see the answer

Q: Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 ...

A: Under absorption costing, fixed manufacturing overhead is treated as product cost. Under variable co...

Q: Can someone please tell me if I'm on the right track, and complete the missing cells by completing t...

A: Click to see the answer

Q: Bonita Company is constructing a building. Construction began on February 1 and was completed on Dec...

A:   Avoidable interest means the interest that would have been avoided in case of expenditure on the a...

Q: The following is extracted from the books of White Co as at 31 December 2019: Net current assets 6 0...

A: Formula: Capital = Assets - Liabilities. Deduction of liabilities from Assets derives the capital.

Q: I need help with Question 2 and 3 show working out       1. Reconstruct the company’s comparative ba...

A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business dur...

Q: im Kwon Digital Components Company assembles circuit boards by using a manually operated machine to ...

A: Click to see the answer

Q: How would you use financial statement analysis?         Is there one ratio that you feel is more val...

A: Financial statements give ideas about performance of company within accounting period.We can compare...