For a recent year, Wicker Company-owned restaurants had the following sales and

Question

For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales Food and packaging Payroll Occupancy (rent, depreciation, etc.) General, selling, and administrative expenses $22,300 $5,831 5,600 6,999 3,200 $21,630 $670 Income from operations Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) b. What is Wicker Company's contribution margin ratio? Round to one decimal place c. How much would income from operations increase if same-store sales increased by $1,300 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.

Explanation / Answer

a Contribution margin = 22300-5831-5600-(3200*40%)= $9589 million b Contribution margin ratio = 9589/22300= 43% c Income from operations increase = 1300*43%= $559 million

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