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Contribution Margin and Contribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the...

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Accounting

Contribution Margin and Contribution Margin Ratio

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

Sales $36,300
Food and packaging $9,214
Payroll 9,600
Occupancy (rent, depreciation, etc.) 11,886
General, selling, and admin. expenses 5,600
Other expense 730
Total expenses (37,030)
Operating income (loss) $(730)

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. $ million

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

c. How much would operating income increase if same-store sales increased by $2,200 million for the coming year, with no change in the contribution margin ratio or fixed costs? $ million

d. What would have been the operating income or loss for the recent year if sales had been $2,200 million more? $ 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. $ million

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