# Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's Company-owned restaurants had the following...

Contribution Margin and Contribution Margin Ratio

For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):

 Sales \$36,600 Food and packaging \$13,934 Payroll 9,200 Occupancy (rent, depreciation, etc.) 7,066 General, selling, and administrative expenses 5,300 \$35,500 Income from operations \$1,100

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 million. (Give answer in millions of dollars.)
\$ million

b. What is McDonald's contribution margin ratio?
%

c. How much would income from operations increase if same-store sales increased by \$2,200 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
\$ million

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