For a recent year, McDonald's (MCD) company-owned réstaurants had the following sales and expenses (in millions): Sales $15,295.0 Food and packaging $(4,896.9) Payroll (4,134.2) Occupancy (rent, depreciation, etc.) (3,667.7) General, selling, and administrative expenses (2,384.5) $(15,083.3) Operating income $211.7 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 operating income increase if same-store sales increased by $800 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

What is contribution margin?

For a recent year, McDonald's (MCD) company-owned réstaurants had the following sales and expenses (in millions):
Sales
$15,295.0
Food and packaging
$(4,896.9)
Payroll
(4,134.2)
Occupancy (rent, depreciation, etc.)
(3,667.7)
General, selling, and administrative expenses
(2,384.5)
$(15,083.3)
Operating income
$211.7
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 operating income increase if same-store sales increased by $800 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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Transcribed Image Text

For a recent year, McDonald's (MCD) company-owned réstaurants had the following sales and expenses (in millions): Sales $15,295.0 Food and packaging $(4,896.9) Payroll (4,134.2) Occupancy (rent, depreciation, etc.) (3,667.7) General, selling, and administrative expenses (2,384.5) $(15,083.3) Operating income $211.7 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 operating income increase if same-store sales increased by $800 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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