Reference no: EM132781859
Question - Contribution Margin and Contribution Margin RatioFor a recent year, McDugal'sSales $25,800 company-owned restaurants had the following sales and expenses (in millions):
Food and packaging $10,474
Payroll 6,800
Occupancy (rent, depreciation, etc.) 4,626
General, selling, and admin. expenses 3,900
Other expense520
Total expenses (26,320)
Operating income (loss) $(520)
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? Enter your answer in million, rounded to one decimal place.
b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place.
c. How much would operating income increase if same-store sales increased by $1,500 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 $1,500 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.
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