For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales...

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For a recent year, McDugals company-owned restaurants had the following sales and expenses (in millions): Sales $14,400 Food

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative ex

business accounting

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Answer 1

Answer #1

rate positively ..

		Total	Variable	Fixed
	Sales	14400
	Food and packaging	3960	3960
	Payroll	3800	3800
	Occupancy (rent, depreciation, etc.)	4440		4440
	General, selling and admin expenses	2200	880	1320
	Other expenses	290		290
	Total expenses		8640	6050


Ans a)	Contribution margin
i	Sales	14,400.0
ii	Variable cost	8,640.0
iii=i-ii	Contribution margin	5,760.0


Ans b)	Contribution margin ratio
i	Contribution margin	5,760.0
ii	Sales	14,400.0
iii	Contribution margin ratio	40.0%

Ans c)
	Change in operating income

i	Incremental revenue	900
ii	contribution margin %	40.0%
iii=i*ii	Incremental operating income =	360

Ans d)
	Operating income = 360-290	70

Ans e)
	Break even
i	Fixed cost	6050
ii	Contribution margin %	40.0%
iii=i/ii	Break even $ =	15125

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Answer 2

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