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

Question

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

Contribution Margin and Contribution Margin Ratio For a recent year, McDugals company-owned restaurants had the following sa
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative ex
Contribution Margin and Contribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales $14,400 $3,960 Food and packaging Payroll 3,800 Occupancy (rent, depreciation, etc.) General, selling, and admin. expenses 8 INN Other expense 10 Total expenses 70 Operating income (loss) 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. $ 5,760 million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. 40 9 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?
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. $ 5,760 million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. 40 % 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? $ 360 million d. What would have been the operating income or loss for the recent year if sales had been $900 million more? $ 70 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 $ 15,125 x million

Answers

e) Fixed costs= Occupancy+General, selling and admin. expenses+Other expense

= $4440+(2200*60%)+290

= $6050 million

Break even point= Fixed cost/Contribution margin ratio

= $6050/40%

= $15125 million

Sales need to increase= $15125-14400

= $725 million


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