Reference no: EM133107459

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

Sales $26,500

Food and packaging $8,435

Payroll 6,700

Occupancy (rent, depreciation, etc.) 6,675

General, selling, and administrative expenses 3,900

$25,710

Income from operations $790

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 $1,600 million for the coming year, with no change in the contribution margin ratio or fixed costs?