Contribution margin and contribution margin ratio For a recent year, McDonalds (MCD) company-owned restaurants had...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Contribution margin and contribution margin ratio
For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions):
Line Item Description
Amount
Sales
$20,000
Food and paper
$(2,800)
Payroll and employee benefits
(2,300)
Occupancy and other expenses
(4,300)
General, selling, and administrative expenses
(4,600)
Total
$(14,000)
Operating income
$6,000
Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? $ _____ 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 $900 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
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
