* 26% . v2.cengagenow.com Ramirez C... s.. Jeans To Does Diet. Black boar. Cenga
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* 26% . v2.cengagenow.com Ramirez C... s.. Jeans To Does Diet. Black boar. Cengage Cengag.. Sign in -C neaker Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's 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 $18,169.3 $6,129.7 4,756.0 4,402.6 2,487.9 $17,776.2 s 393.1 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 McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place) million b. What is McDonald's contribution margin ratio? Round to one decimal place. lion for the c. How much would income from operations increase if same-store sales increased t coming year, with no change in the contribution margin ratio or fixed costs? Round you er to the Check My Work Previous Next All work saved. Email Instructor Save and Exit Submit Assignment for GradingExplanation / Answer
Ans.a Contribution margin $6,288.4 *Calculation: Sales 18169.3 Less: Variable cost: Food and packaging -6129.7 Payroll -4756 General, selling and Administrative expenses -995.16 Contribution margin 6288.44 *Variable part of general selling and Adm. Exp. = 2487.9 * 40% 995.16 Ans.b Contribution margin ratio = 34.6% *Calculation: Contribution margin ratio = Contribution margin / Sales * 100 6288.4 / 18169.3 * 100 34.61% Ans.c Increase in income from operations $173.0 *Calculation: Incremental revenue 500 Contribution margin = 500 * 34.6% $173 Incremental net income = Contribution margin *Fixed cost is same as previous situation so the incremental net income is equal to the contribution margin.
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