Reference no: EM133109737
Question 1 - For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
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Sales
|
|
$16,488
|
|
Food and packaging
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$5,552
|
|
|
Payroll
|
4,400
|
|
|
Occupancy (rent, depreciation, etc.)
|
4,025
|
|
|
General, selling, and admin. expenses
|
2,434
|
|
|
Other expense
|
209
|
|
|
Total expenses
|
|
(16,620)
|
|
Operating income (loss)
|
|
$(132)
|
Assume that the variable costs consist of food and packaging, payroll, and 45% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin?
b. What is McDonald's contribution margin ratio?
c. Use the rounded contribution margin ratio value to answer the following question: how much would operating income increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs?
d. What would have been the operating income or loss for the recent year if sales had been $500 million more?
e. Use the rounded contribution margin ratio value to answer the following question: To achieve break even for the recent year, by how much would sales need to increase?
Question 2 - For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):
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Sales
|
|
$15,000
|
|
Food and packaging
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$6,180
|
|
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Payroll
|
4,000
|
|
|
Occupancy (rent, depreciation, etc.)
|
2,520
|
|
|
General, selling, and admin. expenses
|
2,300
|
|
|
Other expense
|
300
|
|
|
Total expenses
|
|
(15,300)
|
|
Operating income (loss)
|
|
$(300)
|
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?
b. What is McDonald's contribution margin ratio?
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?
d. What would have been the operating income or loss for the recent year if sales had been $900 million more?
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.
Question 3 - For the current year ending December 31, McAdams Industries expects fixed costs of $1,860,000, a unit variable cost of $105, and a unit selling price of $125.
a. Compute the anticipated break-even sales (units).
b. Compute the sales (units) required to realize operating income of $500,000.
Question 4 - For the current year ending December 31, McAdams Industries expects fixed costs of $462,000, a unit variable cost of $60, and a unit selling price of $90.
a. Compute the anticipated break-even sales (units).
b. Compute the sales (units) required to realize operating income of $105,000.
Question 5 - For the coming year, Bernardino Company anticipates a unit selling price of $85, a unit variable cost of $15, and fixed costs of $420,000.
a. Compute the anticipated break-even sales (units).
b. Compute the sales (units) required to realize operating income of $70,000.
c. Construct a cost-volume-profit graph on paper, assuming maximum sales of 10,000 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.
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$1,000,000
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Profit or Loss or Break-even
|
|
$800,000
|
Profit or Loss or Break-even
|
|
$600,000
|
Profit or Loss or Break-even
|
|
$400,000
|
Profit or Loss or Break-even
|
|
$200,000
|
Profit or Loss or Break-even
|
d. Determine the probable operating income (loss) if sales total 8,000 units. If required, use the minus sign to indicate a loss.
Question 5 - For the coming year, Bernardino Company anticipates a unit selling price of $94, a unit variable cost of $47, and fixed costs of $385,400.
1. Compute the anticipated break-even sales in units.
2. Compute the sales (units) required to realize operating income of $197,400.
3. Construct a cost-volume-profit graph on paper, assuming maximum sales of 16,400 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.
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$1,081,000
|
Break-even or Loss or Profit
|
|
$968,200
|
Break-even or Loss or Profit
|
|
$770,800
|
Break-even or Loss or Profit
|
|
$582,800
|
Break-even or Loss or Profit
|
|
$460,600
|
Break-even or LossProfit
|
4. Determine the probable operating income (loss) if sales total 13,100 units. If required, use the minus sign to indicate a loss.