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

For a recent year, McDonalds (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $15,2

For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $15,295.0 Food and packaging $(4,896.9) Payroll (4,134.2) Occupancy (rent, depreciation, etc.) (3,667.7) General, selling, and administrative expenses (2,384.5) $(15,083.3) Operating income $211.7 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). $ x million b. What is McDonald's contribution margin ratio? Round to one decimal place. X % C. How much would operating income increase if same-store sales increased by $800 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place). x million
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ReportAnswer #1

Variable Food and Packaging = $4,896.9

Variable Payroll = $4,134.2

Variable General, Selling and Administrative expenses = 40% * $2,384.5

= $953.8

Fixed General, Selling and Administrative expenses = 60% * $2,384.5

= $1,430.7

Fixed Occupancy = $3,667.7

Total fixed costs = $1,430.7 + $3,667.7

= $5,098.4

Total variable cost = Variable Food and Packaging + Variable Payroll + Variable General, Selling and Administrative expenses

= $4,896.9 + $4,134.2 + $953.8

= $9,984.9

a.

McDonald's Contribution margin = Sales - Variable costs

= $15,295.0 - $9,984.9

= $5,310.1

b.

McDonald's Contribution margin ratio = Contribution margin / Sales

= $5,310.1 / $15,295.0

= 34.7%

c.

Increase in Operating income = $800 * 34.7%

= $277.6

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