For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions): Sales $12,718.9 Food and packaging $ 4,033.5 Payroll 3,528.5 Occupancy (rent, depreciation, etc.) 2,847.6 General, selling, and administrative expenses 2,231.3 12,640.9 Income from operations $ 78.0 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? Round to the nearest tenth of a million (one decimal place). $ million b. What is McDonald's contribution margin ratio? Round your answer to one decimal place. % c. How much would income from operations increase if same-store sales increased by $500 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
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions): Sales $12,718.9 Food and packaging $ 4,033.5 Payroll 3,528.5 Occupancy (rent, depreciation, etc.) 2,847.6 General, selling, and administrative expenses 2,231.3 12,640.9 Income from operations $ 78.0 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? Round to the nearest tenth of a million (one decimal place). $ million b. What is McDonald's contribution margin ratio? Round your answer to one decimal place. % c. How much would income from operations increase if same-store sales increased by $500 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
| Sales | $12,718.9 |
| Food and packaging | $ 4,033.5 |
| Payroll | 3,528.5 |
| Occupancy (rent, depreciation, etc.) | 2,847.6 |
| General, selling, and administrative expenses | 2,231.3 |
| 12,640.9 | |
| Income from operations | $ 78.0 |
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? Round to the nearest tenth of a million (one decimal place).
$ million
b. What is McDonald's contribution margin ratio? Round your answer to one decimal place.
%
c. How much would income from operations increase if same-store sales increased by $500 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
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