Question - For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
|
Sales
|
$ 18,602.5
|
|
Food and packaging
|
$ 6,318.2
|
|
Payroll
|
4,710.3
|
|
Occupancy (rent, depreciation, etc.)
|
4,195.2
|
|
General, selling, and administrative
|
2,445.2
|
|
17,668.9
|
|
|
Income from operations
|
$ 933.6
|
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
Answer the following questions:
1. What is McDonald's contribution margin?
2. What is McDonald's contribution margin ratio?
3. How much would income from operations increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs?