Problem
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
Sales $16,561
Food and packaging $ 5,586
Payroll 4,300
Occupancy (rent, depreciation, etc.) 3,767
General, selling, and administrative expenses 2,355
$16,008
Income from operations $ 553
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
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 $400 million for the coming year, with no change in the contribution margin ratio orfixed costs?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.