For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions): Sales $12,718.9 Food and packaging $ 4,033.5 Payroll 3,528.5 Occupancy (rent, depreciation, etc.) 2,847.6 General, selling, and administrative expenses 2,231.3 12,640.9 Income from operations $ 78.0 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). $fill in the blank 1 million b. What is McDonald's contribution margin ratio? Round your answer to one decimal place. fill in the blank 2 % 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). $fill in the blank 3 million
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
| Sales | $12,718.9 |
| Food and packaging | $ 4,033.5 |
| Payroll | 3,528.5 |
| Occupancy (rent, |
2,847.6 |
| General, selling, and administrative expenses | 2,231.3 |
| 12,640.9 | |
| Income from operations | $ 78.0 |
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).
$fill in the blank 1 million
b. What is McDonald's contribution margin ratio? Round your answer to one decimal place.
fill in the blank 2 %
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).
$fill in the blank 3 million
Contribution margin can be referred to as the excess of revenue over the variable cost of the product. It represents the amount available to recover the fixed cost of the firm. A sales level at which the contribution margin is equal to the fixed cost of the firm is known as break even level.
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