For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales $34,200 Food and packaging $11,734 Payroll 9,100 Occupancy (rent, depreciation, etc.) 8,166 General, selling, and admin. expenses 5,200 Other expense 680 Total expenses (34,880) Operating income (loss) $(680) 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? Enter your answer in million, rounded to one decimal place. $fill in the blank 1 million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. fill in the blank 2 % c. How much would operating income increase if same-store sales increased by $2,100 million for the coming year, with no change in the contribution margin ratio or fixed costs? $fill in the blank 3 million d. What would have been the operating income or loss for the recent year if sales had been $2,100 million more? $fill in the blank 4 million e. To achieve break even for the recent year, by how much would sales need to increase? Enter your anwer in million rounded to the nearest whole number. $fill in the blank 5 million

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...

See similar textbooks

Related questions

Question

For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):

Sales		$34,200
Food and packaging	$11,734
Payroll	9,100
Occupancy (rent, depreciation, etc.)	8,166
General, selling, and admin. expenses	5,200
Other expense	680
Total expenses		(34,880)
Operating income (loss)		$(680)

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? Enter your answer in million, rounded to one decimal place.
$fill in the blank 1 million

b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place.
fill in the blank 2 %

c. How much would operating income increase if same-store sales increased by $2,100 million for the coming year, with no change in the contribution margin ratio or fixed costs?
$fill in the blank 3 million

d. What would have been the operating income or loss for the recent year if sales had been $2,100 million more?
$fill in the blank 4 million

e. To achieve break even for the recent year, by how much would sales need to increase? Enter your anwer in million rounded to the nearest whole number.
$fill in the blank 5 million

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions