Contribution margin and contribution margin ratio
For a recent year, McDonald’s company-owned restaurants had the following sales and expenses (in millions):
|
Sales OUR PROCESSOrderPaymentWritingDeliveryWhy Choose Us: Cost-efficiency, Plagiarism free, Money Back Guarantee, On-time Delivery, Total Сonfidentiality, 24/7 Support, 100% originality |
;$ ; 18,602.5 |
|
Food and packaging |
;$ ; 6,318.2 |
|
Payroll |
; 4,710.3 |
|
Occupancy (rent, depreciation, etc.) |
; 4,195.2 |
|
General, selling, and administrative |
; 2,445.2 |
|
; 17,668.9 |
|
|
Income from operations |
;$ ; 933.6 |
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
Answer the following questions:
1. ; What is McDonald’s contribution margin? ; (Round your answer to the nearest tenth of one decimal place.)
2. ; What is McDonald’s contribution margin ratio? ; (Round your answer to one decimal place.)
3. ; How much would income from operations 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]).
