How much would income from operations increase

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Reference no: EM133110622

Question - Contribution Margin and Contribution Margin Ratio - For a recent year, Mcdonald's Company-owned restaurants had the following sales and expenses (in millions):

Sales

$33,300

Food and packaging

$12,324

Payroll

8,400

Occupancy (rent, depreciation, etc.)

6,776

General, selling, and administrative expenses

4,800

 

$32,300

Income from operations

$1,000

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

Required -

a. What Is Mcdonald's contribution margin?

b. What is Mcdonald's contribution margin ratio?

c. How much would income from operations increase if same-store sales Increased by $2,000 million for the coming year, with no change in the contribution margin ratio or fixed costs?

Reference no: EM133110622

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