Answered: For a recent year, Wicker Company-owned…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Contribution margin and contribution margin ratio For a recent year, McDonalds (MCD) company-owned...

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For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):

Sales	$19,200
Food and packaging	$6,368
Payroll	4,800
Occupancy (rent, depreciation, etc.)	4,652
General, selling, and administrative expenses	2,800
	$18,620
Income from operations	$580

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)
$fill in the blank 1 million

b. What is Wicker Company's contribution margin ratio? Round to one decimal place.
fill in the blank 2 %

c. How much would income from operations increase if same-store sales increased by $1,200 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$fill in the blank 3 million

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