For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $16,488 Food and packaging $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? Enter your answer in million, rounded to one decimal place. $ million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. % 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? $ million
For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions):
| Sales | $16,488 | |
| Food and packaging | $5,552 | |
| Payroll | 4,400 | |
| Occupancy (rent, |
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? Enter your answer in million, rounded to one decimal place.
$ million
b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place.
%
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?
$ million
d. What would have been the operating income or loss for the recent year if sales had been $500 million more?
$ million
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?
$ million
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